Stark Company, a 90% owned subsidiary of Parker,

Stark Company, a 90% owned subsidiary of Parker,

REFERENCE: Ref. 05_12

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

QUESTION #11

REFER TO: Ref. 05_12

82.  Compute the gain or loss on the intra-entity sale of land.

A)  $80,000 gain.

B)  $80,000 loss.

C)  $5,000 gain.

D)  $5,000 loss.

E)  $85,000 loss.

QUESTION #12

REFER TO: Ref. 05_12

83.  Which of the following will be included in a consolidation entry for 2010?

A)  Debit loss for $5,000.

B)  Credit loss for $5,000.

C)  Credit land for $5,000.

D)  Debit gain for $5,000.

E)  Credit gain for $5,000.

QUESTION #13

REFER TO: Ref. 05_12

87.  Compute Parker’s reported gain or loss relating to the land for 2012.

A)  $12,000 gain.

B)  $5,000 loss.

C)  $12,000 loss.

D)  $7,000 gain.

E)  $7,000 loss.