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

question 28

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 2012.

• A) $110,000.
• B) $100,000.
• C) $125,000.
• D) $85,000.
• E) $88,000.

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Definitions:

Chlorine Radical

A reactive atom of chlorine that possesses an unpaired electron, making it extremely reactive with other substances.

Tertiary H Atoms

Hydrogen atoms bonded to a tertiary carbon, which is a carbon atom bonded to three other carbon atoms.

Primary H Atoms

Hydrogen atoms attached to a carbon atom that is in turn bonded to no more than one other carbon atom.

Monobromination Product

A substance obtained by introducing a bromine atom into an organic molecule, typically replacing a hydrogen atom.