1. Stiller Company, an 80% owned subsidiary of Leo Company, purchased land from Leo on March 1, 2009, for $75,000. The land originally cost Leo $60,000. Stiller reported net income of $125,000 and $140,000 for 2009 and 2010, respectively. Leo uses the equity method to account for its investment. On a consolidation worksheet, having used the equity method, what adjustment would be made for 2010 regarding the land transfer? a. Debit retained earnings for $15,000 b. Credit retained earnings for $15,000 c. Debit retrained earnings for $50,000 d. Credit retained earnings for $50,000 e. Debit investment in Stiller for $15,000 2. Stiller Company, an 80% owned subsidiary of Leo Company, purchased land from Leo on March 1, 2009, for $75,000. The land originally cost Leo $60,000. Stiller reported net income of $125,000 and $140,000 for 2009 and 2010, respectively. Leo uses the equity method to account for its investment. Compute the gain or loss on the intercompany sale of land. a. $15,000 loss b. $15,000 gain c. $50,000 loss d. $50,000 gain e. $65,000 gain 3. Parent sold land to its subsidiary for a gain in 2007. The subsidiary sold the land externally for a gain in 2010. Which of the following statements is true? a. A gain will be reported on the consolidated income statement in 2007. b. A gain will be reported on the consolidated income statement in 2010. c. No gain will be reported on the 2010 consolidated income statement. d. Only the parent company will report a gain in 2010. e. The subsidiary will report a gain in 2007