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

question 29

Multiple Choice

Stiller Company, an 80% owned subsidiary of Leo Company, purchased land from Leo on March 1, 2010, for $75,000. The land originally cost Leo $60,000. Stiller reported net income of $125,000 and $140,000 for 2010 and 2011, respectively. Leo uses the equity method to account for its investment. Compute income from Stiller on Leo's books for 2011.

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

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Definitions:

Control Group

In scientific experimentation, a group of subjects who do not receive the treatment or intervention being tested, used as a benchmark to measure how the other tested subjects do.

Participant

An individual who takes part in a particular process or activity.

Sociological Research

The systematic study of social behavior, interactions, and structures to understand and explain patterns of human activity.

Empirical Observation

The process of acquiring knowledge directly through the senses or via scientific instruments, which is based on experience and evidence rather than theory.