Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 38

Problems 19 through 21 are based on the following information.
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:
On January 1, 2011, Stamford reacquires 8,000 of the outstanding shares of its own common stock for $24 per share.None of these shares belonged to Neill.How does this transaction affect the parent company's Additional Paid-In Capital account
a.Has no effect on it.
b.Decreases it by $55,000.
c.Decreases it by $35,000.
d.Decreases it by $28,000.