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

question 43

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 2021.

• A) $185,000.
• B) $157,500.
• C) $166,500.
• D) $162,000.
• E) $180,000.

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Definitions:

Voltage Regulator

A device that controls the amount of current that is supplied to the field winding in an AC generator.

Current

The flow of electric charge through a conductor, measured in amperes, which is a fundamental concept in electricity and electronics.

Starter Control Circuit

An electrical circuit that manages the operation of a vehicle's starter motor, enabling the engine to start.

Stator Winding

The stationary coil windings located in an alternator or electric generator, which generate magnetic fields when electric current flows through them.