Stiller Company, an 80% Owned Subsidiary of Leo Company, Purchased

question 59

Multiple Choice

Stiller Company, an 80% owned subsidiary of Leo Company, purchased land from Leo on March 1, 2020, for $75,000. The land originally cost Leo $60,000. Stiller reported net income of $125,000 and $140,000 for 2020 and 2021, respectively. Leo uses the equity method to account for its investment.Assuming there are no excess amortizations or other intra-entity transactions, compute income from Stiller on Leo's books for 2020.

• A) $110,000.
• B) $100,000.
• C) $125,000.
• D) $85,000.
• E) $88,000.

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Definitions:

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