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

question 58

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 2011?

• A) Debit retained earnings for $5,000.
• B) Credit retained earnings for $5,000.
• C) Debit investment in subsidiary for $5,000.
• D) Credit investment in subsidiary for $5,000.
• E) Credit land for $5,000.

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Definitions:

Systematic Fashion

Refers to doing things in a methodical, organized way, typically to achieve efficiency and to ensure that no steps are missed.

Sample Size

The number of individuals or observations included in a study, which can affect the reliability and validity of the research findings.

Temper Tantrums

Emotional outbursts, often observed in children, that are characterized by yelling, crying, and aggressive or defiant behavior.

Anal Stage

A phase in Freudian psychosexual development centered around the child's control over bowel movements, typically occurring from age 18 months to three years.