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

question 114

Multiple Choice

Stark Company, a 90% owned subsidiary of Parker, Inc. sold land to Parker on May 1, 2012, for $80,000. The land originally cost Stark $85,000. Stark reported net income of $200,000, $180,000, and $220,000 for 2012, 2013, and 2014, respectively. Parker sold the land purchased from Stark in 2012 for $92,000 in 2014.
Compute the gain or loss on the intra-entity sale of land.

• A) $80,000 gain.
• B) $80,000 loss.
• C) $5,000 gain.
• D) $5,000 loss.
• E) $85,000 loss.

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Definitions:

External Environment

Factors outside of an organization that can affect its performance, including economic, social, technological, and political conditions.

Environmental Impact

The effect or influence of human activities on the natural environment, including changes to ecosystems, biodiversity, and climate.

Increasing Uncertainty

The situation in which the amount of unpredictability in the environment or the future outcomes of decisions is rising.

Managerial Experience

The accumulation of knowledge, skills, and expertise that an individual has acquired through holding managerial positions over time.