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

question 123

Multiple Choice

Stiller Company, an 80% owned subsidiary of Leo Company, purchased land from Leo on March 1, 2012, for $75,000. The land originally cost Leo $60,000. Stiller reported net income of $125,000 and $140,000 for 2012 and 2013, respectively. Leo uses the equity method to account for its investment.
Compute income from Stiller on Leo's books for 2013.

• A) $140,000.
• B) $97,000.
• C) $125,000.
• D) $100,000.
• E) $112,000.

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Definitions:

Full Siblings

Individuals who share both biological parents, having a full genetic overlap of 50% on average from each parent.

Genetics

The branch of biology that deals with the study of genes, genetic variation, and heredity in organisms.

Birth Order

The order in which a person is born into their family, which is theorized to influence their personality and behavior.

Contrast Effect

The enhancement or diminishment of perception or judgment by the presence of a comparatively stronger or weaker stimulus.