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Question(s) / Instruction(s):

An intra-entity sale took place whereby the transfer price exceeded 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 gain for a downstream transfer.

B. A worksheet entry is made with a debit to gain for an upstream transfer.

C. A worksheet entry is made with a debit 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 a downstream transfer, regardless of the method used account for the investment.

E. No worksheet entry is necessary.


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