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Required: a. On January 1, 2024, Stuart issues 10,000 additional shares of common stock for $25 per share. Poseidon acquires 8,000 of these shares. Compute the effect of this transaction on the parent company's Additional Paid-In Capital account. b. On January 1, 2024, Stuart issues 10,000 additional shares of common stock for $15 per share. Poseidon does not acquire any of this newly issued stock. Compute the effect of this transaction on the parent company's Additional Paid-In Capital account. c. On January 1, 2024, Stuart reacquires 8,000 of the outstanding shares of its own common stock for $24 per share. None of these shares belonged to Poseidon. Compute the effect of this transaction on the parent company's Additional Paid-In Capital account.

Required: a. On January 1, 2024, Stuart issues 10,000 additional shares of common stock for $25 per share. Poseidon acquires 8,000 of these shares. Compute the effect of this transaction on the parent company's Additional Paid-In Capital account. b. On January 1, 2024, Stuart issues 10,000 additional shares of common stock for $15 per share. Poseidon does not acquire any of this newly issued stock. Compute the effect of this transaction on the parent company's Additional Paid-In Capital account. c. On January 1, 2024, Stuart reacquires 8,000 of the outstanding shares of its own common stock for $24 per share. None of these shares belonged to Poseidon. Compute the effect of this transaction on the parent company's Additional Paid-In Capital account.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Poseidon Company purchases 80 percent of the common stock of Stuart Company on January 1, 2020, when Stuart has the following stockholders' equity accounts: Common stock-40,000 shares outstanding Additional paid-in capital Retained earnings, 1/1/20 Total stockholders' equity $ 100,000 75,000 540,000 $ 715,000 To acquire this interest in Stuart, Poseidon 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 an indefinite-lived intangible, which has not experienced any impairment. On January 1, 2021, Stuart reports retained earnings of $620,000. Poseidon has accrued the increase in Stuart's retained earnings through application of the equity method. Required: a. On January 1, 2024, Stuart issues 10,000 additional shares of common stock for $25 per share. Poseidon acquires 8,000 of these shares. Compute the effect of this transaction on the parent company's Additional Paid-In Capital account. b. On January 1, 2024, Stuart issues 10,000 additional shares of common stock for $15 per share. Poseidon does not acquire any of this newly issued stock. Compute the effect of this transaction on the parent company's Additional Paid-In Capital account. c. On January 1, 2024, Stuart reacquires 8,000 of the outstanding shares of its own common stock for $24 per share. None of these shares belonged to Poseidon. Compute the effect of this transaction on the parent company's Additional Paid-In Capital account. Required A Required B Required C On January 1, 2024, Stuart issues 10,000 additional shares of common stock for $25 per share. Poseidon acquires 8,000 of these shares. Compute the effect of this transaction on the parent company's Additional Paid-In Capital account. Increase (decrease) in Additional Paid-in Capital Required B >
Transcribed Image Text:Poseidon Company purchases 80 percent of the common stock of Stuart Company on January 1, 2020, when Stuart has the following stockholders' equity accounts: Common stock-40,000 shares outstanding Additional paid-in capital Retained earnings, 1/1/20 Total stockholders' equity $ 100,000 75,000 540,000 $ 715,000 To acquire this interest in Stuart, Poseidon 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 an indefinite-lived intangible, which has not experienced any impairment. On January 1, 2021, Stuart reports retained earnings of $620,000. Poseidon has accrued the increase in Stuart's retained earnings through application of the equity method. Required: a. On January 1, 2024, Stuart issues 10,000 additional shares of common stock for $25 per share. Poseidon acquires 8,000 of these shares. Compute the effect of this transaction on the parent company's Additional Paid-In Capital account. b. On January 1, 2024, Stuart issues 10,000 additional shares of common stock for $15 per share. Poseidon does not acquire any of this newly issued stock. Compute the effect of this transaction on the parent company's Additional Paid-In Capital account. c. On January 1, 2024, Stuart reacquires 8,000 of the outstanding shares of its own common stock for $24 per share. None of these shares belonged to Poseidon. Compute the effect of this transaction on the parent company's Additional Paid-In Capital account. Required A Required B Required C On January 1, 2024, Stuart issues 10,000 additional shares of common stock for $25 per share. Poseidon acquires 8,000 of these shares. Compute the effect of this transaction on the parent company's Additional Paid-In Capital account. Increase (decrease) in Additional Paid-in Capital Required B >
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