REFERENCE: Ref.05_09 Stiller Company,an 80% Owned Subsidiary of Leo Company,purchased Land from Land

question 81

Multiple Choice

REFERENCE: Ref.05_09
Stiller Company,an 80% owned subsidiary of Leo Company,purchased land from Leo on March 1,2009,for $75,000.The land originally cost Leo $60,000.Stiller reported net income of $125,000 and $140,000 for 2009 and 2010,respectively.Leo uses the equity method to account for its investment.
-On a consolidation worksheet,having used the equity method,what adjustment would be made for 2010 regarding the land transfer?

• A)Debit retained earnings for $15,000.
• B)Credit retained earnings for $15,000.
• C)Debit retained earnings for $50,000.
• D)Credit retained earnings for $50,000.
• E)Debit investment in Stiller for $15,000.

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Definitions:

Posterior Probabilities

The revised probabilities of scenarios or hypotheses being true, updated in light of new evidence or information.

Prior Probabilities

Initial probabilities used in Bayesian analysis, representing beliefs about probabilities before new evidence is taken into account.

Joint Probabilities

The probability of two events occurring together and at the same point in time.

Union Probabilities

The probability of the occurrence of at least one of two or more events.