Popper Co. acquired 80 percent of the common stock of Cocker Co. on 1^st January, 2009, when Cocker had the subsequent stockholders' equity accounts.

To get 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 yearly and has not been determined to be impaired as of 1^st January, 2012.
On 1^st January, 2012, Cocker reported a net book value of $1,113,000 before the subsequent transactions were conducted. Popper uses the equity method to account for its investment in Cocker, thereby reflecting change in book value of Cocker.

1. On 1^st January, 2012, Cocker issued 10,000 additional shares of common stock for $21 per share. Popper did not get any of this newly issued stock. Find how would this transaction affect additional paid-in capital of the parent company? 
A. $0.
B. decrease it by $23,240.
C. decrease it by $68,250.
D. decrease it by $45,060.
E. decrease it by $43,680.


AACSB: Analytic
AICPA FN: Measurement
Bloom's: Application
Difficulty: Medium
Learning Objective: 06-06 understand accounting for subsidiary stock transactions that impact underlying value recorded within parent's Investment account and consolidated financial statements.

2. On 1^st January, 2012, Cocker reacquired 8,000 of the outstanding shares of its own common stock for $34 per share. None of these shares belonged to Popper. How could this transaction have affected the additional paid-in capital of parent company? 
A. $0.
B. decrease it by $32,900.
C. decrease it by $45,700.
D. decrease it by $49,400.
E. decrease it by $50,500.