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

question 68

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.Assuming there are no excess amortizations or other intra-entity transactions, compute income from Stark reported on Parker's books for 2022.

• A) $204,300.
• B) $202,500.
• C) $193,500.
• D) $191,700.
• E) $198,000.

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Definitions:

Adoptive Parents

are individuals who become the legal parents of a child through the process of adoption, assuming all parental rights and responsibilities.

Biological Parents

The parents who are genetically related to a child, contributing to the child's genetic makeup through reproduction.

Strongly Related

Having a close and direct connection or correlation between entities or concepts.

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A positive state that includes feeling good, functioning effectively, and generally being satisfied with life.