On January 1, 2021, Stamford reacquires 8,000 of the outstanding shares of its own common stock for $24 per share. None of these shares belonged to Neill. How does this transaction affect the parent company’s Additional Paid-In Capital account?
a. Has no effect on it.
b. Decreases it by $55,000.
c. Decreases it by $35,000.
d. Decreases it by $28,000.

Neill Company purchases 80 percent of the common stock of Stamford Company on January 1, 2020, when Stamford has the following stockholders’ equity accounts:

On January 1, 2021, Stamford reports retained earnings of $620,000. Neill has accrued the increase in Stamford’s retained earnings through application of the equity method. View the following problems as independent situations.

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$100,000 Common stock-40,000 shares outstanding Additional paid-in capital Retained earnings, 1/1/20. 75,000 540,000 $715.000 Total stockholders' equity.