Stark Company, a 90%-owned subsidiary of Parker, Inc., sold land to Parker on May 1, 20x4, for P80,000. The land originally cost Stark P85,000. Stark reported net income of P200,000, P180,000 and P220,000 for 20x4, 20x5 and 20x6, respectively. Parker sold the land it purchased from Stark in 20x4 for P92,000 in 20x6. (Assume the use of equity method)

Required: Compute for the following:

1.Gain or loss on the intercompany sale of land.

2.Which of the following will be included in a working paper entry for 20x4?

a. Debit loss for P5,000c. Debit gain for P5,000

b. Credit loss for P5,000d. Credit gain for P5,000

3.Which of the following will be included in a working paper entry for 20x5?

a. Debit retained earnings for P5,000

b. Credit retained earnings for P5,000

c. Debit investment in subsidiary for 5000

d. Credit investment in subsidiary for 5000

4.Income from Stark reported on Parker's books for 20x4.

5.Income from Stark reported on Parker's books for 20x5.

6.Consolidated gain or loss relating to the land for 20x6.

7.Parker's gain or loss relating to the land for 20x6.

8.Stark's reported gain or loss relating to the land for 20x6.

9.Income from Stark reported on Parker's books for 20x6.