1. Which one of the following will increase consolidated retained earnings?

Select one:

a.An increase in the value of goodwill associated with a subsidiary subsequent to the parent's date of acquisition

b.The amortization of a $10,000 excess in the fair value of a note payable over its recorded book value

c.The depreciation of a $10,000 excess in the fair value of equipment over its recorded book value

d.The sale of inventory by a subsidiary that had a $10,000 excess in fair value over recorded book value on the parent's date of acquisition

A(n) ________ sale is a sale by a parent company to a subsidiary. A(n) ________ sale is a sale by a subsidiary to a parent company.

Select one:

a.deferred; realized.

b.realized; deferred.

c.upstream; downstream

d. downstream; upstream

Parent Corporation owns a 80% interest in Sub Company, acquired several years ago at a cost equal to book value and fair value. Sub sells merchandise to Parent for the first time in 20X1, and some is unsold at December 31, 20X1. In computing income from the investee for 20X1 under the equity method, Parent uses which equation?

Select one:

a.80% of Sub's income less 100% of the unrealized profit in Parent's ending inventory

b.80% of Sub's income plus 100% of the unrealized profit in Parent's ending inventory

c.80% of Sub's income less 80% of the unrealized profit in Parent's ending inventory

d.80% of Sub's income plus 80% of the unrealized profit in Parent's ending inventory