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

question 123

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 2013.

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

---

Definitions:

Deltoid

A large, triangular-shaped muscle covering the shoulder joint, responsible for arm abduction.

Triceps Brachii

A muscle located at the back of the upper arm, responsible for extension of the elbow joint.

Cauda Equina

A bundle of spinal nerves and spinal nerve rootlets located at the lower end of the spinal cord, resembling a horse's tail.

Conus Medullaris

The tapered end of the spinal cord, located around the first lumbar vertebra, where spinal nerves converge.