An Intra-Entity Sale Took Place Whereby the Transfer Price Was

question 32

Multiple Choice

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

• A) A worksheet entry is made with a debit to investment in subsidiary for an upstream transfer.
• B) A worksheet entry is made with a debit to investment in subsidiary for a downstream transfer.
• C) A worksheet entry is made with a credit to investment in subsidiary for a downstream transfer when the parent uses the equity method.
• D) A worksheet entry is made with a debit to retained earnings for an upstream transfer, regardless of the method used to account for the investment.
• E) No worksheet entry is necessary.

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Definitions:

Agricultural Price Supports

Government interventions to stabilize or increase agricultural commodity prices through mechanisms such as subsidies, minimum price settings, or purchasing surplus.

Large-Scale Farmers

Farmers who operate extensive areas of land and generally engage in high-volume production of crops or livestock.

Farm Subsidies

Governmental aid programs aimed at supporting farmers and agricultural enterprises by enhancing their earnings, regulating the production of farm goods, and affecting the price and availability of these commodities.

Budget Deficit

The amount by which expenditures exceed revenues in any year.