An intra-entity transfer took place whereby the book value exceeded the transfer
ID: 2524827 • Letter: A
Question
An intra-entity transfer took place whereby the book value exceeded the transfer price of a depreciable asset. Which statement is true for the year after the year of transfer?
No worksheet entry is necessary.
A worksheet entry is made with a credit to retained earnings for an upstream transfer.
A worksheet entry is made with a debit to retained earnings for a downstream transfer.
A worksheet entry is made with a debit to investment in subsidiary for a downstream transfer.
A worksheet entry is made with a debit to retained earnings for an upstream transfer.
No worksheet entry is necessary.
A worksheet entry is made with a credit to retained earnings for an upstream transfer.
A worksheet entry is made with a debit to retained earnings for a downstream transfer.
A worksheet entry is made with a debit to investment in subsidiary for a downstream transfer.
A worksheet entry is made with a debit to retained earnings for an upstream transfer.
Explanation / Answer
Whenever in an intra entity transfer took place and the book value is more than the transfer price of a depreciable asset then, a worksheet entry is made with a credit to retained earnings for an upstream transfer .
So, correct option is " B " i.e. a worksheet entry is made with a credit to retained earnings for an upstream transfer.
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