Question
These questions are based on the following information and should be viewed as independent situations . Popper Co. acquired 80% of the common stock of
These questions are based on the following information and should be viewed asindependent situations.
Popper Co. acquired 80% of the common stock of Cocker Co. on January 1, 2016, when Cocker had the following stockholders' equity accounts.
Common stock 40,000 shares outstanding $140,000
Additional paid-in capital105,000
Retained earnings476,000
Total stockholders' equity $721,000
To acquire this interest in Cocker, Popper paid a total of $682,000 with any excess acquisition date fair value over book value being allocated to goodwill, which has been measured for impairment annually and has not been determined to be impaired as of January 1, 2019. Popper did not pay any premium when it acquired its original interest in Cocker. On January 1, 2019, Cocker reported a net book value of $1,113,000 before the following transactions were conducted. Popper uses the equity method to account for its investment in Cocker, thereby reflecting the change in book value of Cocker.
On January 1, 2019, Cocker issued 10,000 additional shares of common stock for $21 per share. Popper did not acquire any of this newly issued stock. How would this transaction affect the additional paid-in capital of the parent company?
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