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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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