On January 1, 2021, Stamford issues 10,000 additional shares of common stock for $15 per share. Neill does not acquire any of this newly issued stock. How does this transaction affect the parent company’s Additional Paid-In Capital account?

a. Has no effect on it

b. Increases it by $44,000

c. Decreases it by $35,200

d. Decreases it by $55,000

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

Common stock—40,000 shares outstanding . . . . . . . . . . . . . . . . . . . . . . $ 100,000
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  75,000
Retained earnings, 1/1/20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .540,000
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 715,000

To acquire this interest in Stamford, Neill pays a total of $592,000. The acquisition-date fair value of the 20 percent noncontrolling interest was $148,000. Any excess fair value was allocated to goodwill, which has not experienced any impairment. 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.