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Question 1: 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?
Point A. A worksheet entry is made with a debit to investment in subsidiary for an upstream transfer.
Point B. A worksheet entry is made with a debit to investment in subsidiary for a downstream transfer.
Point C. A worksheet entry is made with a credit to investment in subsidiary for a downstream transfer when the parent uses the equity method.
Point 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.
Point E. No worksheet entry is necessary.
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