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

question 13

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.Which of the following will be included in a consolidation entry for 2020?

• A) Debit Loss on Sale of Land for $5,000.
• B) Credit Loss on Sale of Land for $5,000.
• C) Debit Land for $5,000.
• D) Debit Retained Earnings for $5,000.
• E) Credit Gain on Sale of Land for $5,000.

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Definitions:

Double Approach-Avoidance Conflict

A psychological conflict that involves a decision between two goals, each with both appealing and negative aspects.

Learned Helplessness

A psychological condition wherein individuals believe they have no control over the outcomes of situations, resulting from repeated exposure to uncontrollable events.

Frustration

The feeling of being upset or annoyed as a result of being unable to change or achieve something.

Burnout

A state of emotional, physical, and mental exhaustion caused by excessive and prolonged stress, often related to one's work.