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

question 59

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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.Assuming there are no excess amortizations or other intra-entity transactions, compute income from Stiller on Leo's books for 2020.


Definitions:

Explaining Events

The process of providing reasons or causes for occurrences, aiming to make sense of why things happen in the way they do.

Psychological Contract

The unwritten and unspoken expectations, beliefs, and assumptions about the reciprocal obligations between employees and their employer.

Attribution

The process by which individuals explain the causes of behavior and events.

Self-Serving Bias

The tendency to explain personal success by internal causes and personal failures by external causes.

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