An Intra-Entity Sale Took Place Whereby the Book Value Exceeded

question 72

Multiple Choice

An intra-entity sale took place whereby the book value exceeded the transfer price of a depreciable asset. Which statement is true for the year following the sale?

• A) A worksheet entry is made with a debit to retained earnings for an upstream transfer.
• B) A worksheet entry is made with a credit to retained earnings for an upstream transfer.
• C) A worksheet entry is made with a debit to retained earnings for a downstream transfer.
• D) A worksheet entry is made with a debit to investment in subsidiary for a downstream transfer.
• E) No worksheet entry is necessary.

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Definitions:

Insured

An individual or entity covered by an insurance policy, receiving financial protection or reimbursement against losses from an insurer.

Loss

The state or condition of not having something anymore, often referring to the disadvantage suffered following a particular event or action.

Breach of Warranty

Failure to meet the terms of a promise or guarantee made about the quality or durability of a product or service.

Auto Insurance

A type of insurance policy that covers vehicles and their drivers against potential financial losses related to accidents, theft, or damage.