On January 1, 2011, Stamford issues 10,000 additional shares of common stock for ($25) per share. Neill
Question:
On January 1, 2011, Stamford issues 10,000 additional shares of common stock for \($25\) per share. Neill acquires 8,000 of these shares. How will this transaction affect the parent company’s Additional Paid-In Capital account?
a. Has no effect on it.
b. Increases it by \($20,500\).
c. Increases it by \($36,400\).
d. Increases it by \($82,300\).
Neill Company purchases 80 percent of the common stock of Stamford Company on January 1, 2010, when Stamford has the following stockholders’ equity accounts:
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, 2011, 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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