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

question 73

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 income from Stark reported on Parker's books for 2010.

• A) $205,000.
• B) $200,000.
• C) $180,000.
• D) $175,500.
• E) $184,500.

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Definitions:

Exchange Rates

The frequency at which currencies from different countries can be exchanged, playing a role in international trading and investment schemes.

Foreign Subsidiary

A company that is partly or wholly owned by another company, known as the parent company, and is located in a different country.

Functional Currency

A currency that an entity uses to conduct key aspects of its business operations, affecting how financial transactions and balances are denominated.

Dividends

Payments made by a corporation to its shareholder members, typically from profits earned.