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

question 49

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 income from Stark reported on Parker's books for 2014.

• A) $204,300.
• B) $202,500.
• C) $193,500.
• D) $191,700.
• E) $198,000.

Understand the concept and implications of social norms in regulating behavior.

Recognize and explain fundamental attribution error and its effects on judgment.

Comprehend the dynamics of obedience and conformity, including factors that influence them.

Grasp the relationship between self-concept and social influences.

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Definitions:

Initial Franchise Fee

The upfront cost paid by a franchisee to a franchisor for the rights to use the franchisor's brand, business model, and resources to operate a franchise.

Gross Profit

The financial metric that represents the difference between sales revenue and the cost of goods sold (COGS), indicating the efficiency of a company in managing labor and supplies in production.

Deferred Gross Profit

The portion of gross profit on installment sales that is not recognized immediately but is deferred until cash is received.

Cost Recovery Method

An accounting method where profits are not recognized until all the costs of the goods sold are recovered.