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

question 7

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.On a consolidation worksheet, what adjustment would be made for 2020 regarding the land transfer?

• A) Debit gain for $50,000.
• B) Credit gain for $50,000.
• C) Debit land for $15,000.
• D) Credit land for $15,000.
• E) Credit gain for $15,000.

---

Definitions:

Strategic Goods

Products, services, or materials that are crucial to a company’s business strategy or to national security, often subject to trade controls.

Value Engineering (VE)

A systematic method to improve the "value" of goods or products and services by using an examination of function. Value, in this context, can be defined as the ratio of function to cost.

Value Analysis (VA)

is a method to improve product value by examining its function, design, and the cost of components, aiming for cost reduction while maintaining quality.

FinTech Firms

Companies that innovate and provide technological solutions for the finance sector, often disrupting traditional banking services and methods.