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

question 14

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 2021?

• A) Debit Retained Earnings for $5,000.
• B) Credit Retained Earnings for $5,000.
• C) Debit Investment in Subsidiary for $5,000.
• D) Credit Investment in Subsidiary for $5,000.
• E) Credit Land for $5,000.

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Definitions:

Security Features

Measures or mechanisms implemented to ensure safety and prevent unauthorized access or damage.

Photocopy Clearly

The act of making a clear and readable copy of a document or image using a photocopying machine.

Secure Document Check Face

The process of examining the front side of a document to ensure its validity and security features are intact.

Cash Back

A feature of some financing arrangements and credit cards where a percentage of the amount spent is returned to the cardholder.