Use the following information for questions 6 and 7:

On Janury 1, 2015, Parent company sold to Subsidiary company for $60,000, a parcel of land that had cost the Parent $57,000. On March 2, 2019, Subsidiary company sold the land to an outside company for $62,000.

6. Working paper entries for the year ended December 31, 2017 would include

a. a debit of $3,000 to Land

b. a credit of $7,000 to Land

c. a debit of $3,000 to Investment in Subsidiary

d. a debit of $3,000 to Retained Earnings

7. Working paper entries for the year ended December 31, 2019 would include

a. A credit of $3,000 to Gain on Sale of Land

b. A credit of $5,000 to Retained Earnings

c. A debit of $3,000 to Intercompany Gain on Sale of Land

d. A credit of $5,000 to Gain on Sale of Land

11. Qualitative evidence that an entity is NOT a variable interest entity includes which one of the following?

a. The entitys equity level is greater than that of similar entities that do not require their debt to be guaranteed by another party.

b. The entity has a debt to equity ratio that is higher than that of its competitors.

c. The entitys business is not focused on just a few customers.

d. The entity has issued preferred and common stock, and the shareholders are guaranteed a certain return on their investment.

12. Included in the working paper entry for intercompany sales of equipment was a decrease to Investment in Subsidiary. This decrease indicates

a. A downstream sale made at a gain

b. An upstream sale made at a loss

c. A downstream sale mad at a loss

d. An upstream sale made at a gain