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

question 25

Multiple Choice

Stark Company, a 90% owned subsidiary of Parker, Inc., sold land to Parker on May 1, 2010, for $80,000. The land originally cost Stark $85,000. Stark reported net income of $200,000, $180,000, and $220,000 for 2010, 2011, and 2012, respectively. Parker sold the land purchased from Stark in 2010 for $92,000 in 2012. Which of the following will be included in a consolidation entry for 2010?

• A) Debit loss for $5,000.
• B) Credit loss for $5,000.
• C) Credit land for $5,000.
• D) Debit gain for $5,000.
• E) Credit gain for $5,000.

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Definitions:

Intellectualization

Intellectualization is a defense mechanism where reasoning is used to block confrontation with an unconscious conflict and its associated emotional stress.

Sublimation

A defense mechanism in which socially unacceptable impulses are transformed into socially acceptable actions or behavior.

Projection

A defense mechanism where individuals attribute their own unacceptable thoughts, feelings, and motives to another person.

Displacement

In psychology, a defense mechanism where an individual shifts negative feelings from their original source to a more acceptable or less threatening target.