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

question 46

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 Stark's reported gain or loss relating to the land for 2022.

• A) $5,000 loss.
• B) $5,000 gain.
• C) $7,000 loss.
• D) $7,000 gain.
• E) $ 0.

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Definitions:

Misinformation Effect

A memory phenomenon in which a person's recall of an event becomes less accurate due to the introduction of misleading information.

Procedural Memory

Procedural memory involves the long-term memory of how to perform different actions and skills, essentially knowing "how" to do things, operating mostly at an unconscious level.

Long-Term Memory

A type of memory capable of storing an unlimited amount of information for periods ranging from a few days to a lifetime.

Declarative Memory

The aspect of human memory that involves the recall of facts and events.