Neill does not acquire any of this newly issued stock. How does this transaction affect the parent
Question:
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:
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:
On January 1, 2021, Stamford issues 10,000 additional shares of common stock for $15 per share.
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ANSWER The correct answer is b Increases it by 44000 When Stamford issues 10000 a...View the full answer
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