Stark Company, a 90% owned subsidiary of Parker, Inc. sold land to Parker on May 1, 2012, for $80,000. The land originally cost Stark $85,000. Stark reported net income of $200,000, $180,000, and $220,000 for 2012, 2013, and 2014, respectively. Parker sold the land purchased from Stark in 2012 for $92,000 in 2014.
Compute income from Stark reported on Parker's books for 2012.
A) $205,000.
B) $200,000.
C) $180,000.
D) $175,500.
E) $184,500.

Question

Quizplus · Accepted Answer

Parent's Part of Net Income 2012 ($200,000 × .90) = $180,000 + (Adjusted Loss on Land $5,000 × .90) $4,500 = $184,500

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