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

question 110

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 it purchased from Stark in 2010 for $92,000 in 2012.
-Compute the gain or loss relating to the land that will be reported in consolidated net income for 2012.

• A) $5,000 loss.
• B) $7,000 gain.
• C) $12,000 gain.
• D) $7,000 loss.
• E) $12,000 loss.