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

question 79

Multiple Choice

Stiller Company, an 80% owned subsidiary of Leo Company, purchased land from Leo on March 1, 2010, for $75,000. The land originally cost Leo $60,000. Stiller reported net income of $125,000 and $140,000 for 2010 and 2011, respectively. Leo uses the equity method to account for its investment.
-Compute the gain or loss on the intra-entity sale of land.

• A) $15,000 loss.
• B) $15,000 gain.
• C) $50,000 loss.
• D) $50,000 gain.
• E) $65,000 gain.

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Definitions:

Refraction

Bending of a light ray when it passes from one medium into another of different density.

Visual Image

A mental representation of physical objects or scenes derived from sensory input, particularly through the process of seeing.

Nourishment

The food and nutrients necessary for growth, health, and good condition.

Pupil Diameter

The size of the opening in the center of the iris of the eye, which regulates the amount of light that enters the eye.