Stark Company, a 90% Owned Subsidiary of Parker, Inc

question 31

Multiple Choice

Stark Company, a 90% owned subsidiary of Parker, Inc., sold land to Parker on May 1, 2020, for $80,000. The land originally cost Stark $85,000. Stark reported net income of $200,000, $180,000, and $220,000 for 2020, 2021, and 2022, respectively. Parker sold the land purchased from Stark for $92,000 in 2022. Both companies use the equity method of accounting.Compute the gain or loss reported on Stark's books prior to consolidation from the intra-entity transfer of land in 2020.

• A) $80,000 gain.
• B) $80,000 loss.
• C) $5,000 gain.
• D) $5,000 loss.
• E) $85,000 loss.

---

Definitions:

Intrinsic Motivation

The internal desire to perform a task for its own sake because it is interesting or enjoyable, without relying on external rewards or pressures.

Prejudice

Preconceived opinion or bias against an individual or group without sufficient knowledge, thought, or reason.

Self-esteem

Someone's internal judgement of their own significance or value.

Cognitive Control

The ability of individuals to regulate their own cognitive processes, including their thoughts, attention, and emotions.