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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