Stiller Company, an 80% owned subsidiary of Leo Company
REFERENCE: Ref. 05_11
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.
QUESTION #9
REFER TO: Ref. 05_011
77. 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.
QUESTION #10
REFER TO: Ref. 05_11
78. On a consolidation worksheet, what adjustment would be made for 2010 regarding the land transfer?
A) Debit gain for $50,000.
B) Credit gain for $50,000.
C) Debit land for $15,000.
D) Credit land for $15,000.
E) Credit gain for $15,000.
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