1. Using the fully adjusted equity method, an intercompany gain on an upstream sale of land is:

-recognized by the parent and the deferral is shared between the controlling and noncontrolling stockholders of the subsidiary.

-recognized by the subsidiary and the deferral is shared between the controlling and noncontrolling stockholders of the subsidiary.

-deferred by the subsidiary until the land is sold to an entity outside the consolidated group.

-recognized by the subsidiary and the deferral is completely allocated to the controlling stockholders of the subsidiary.

2. You need $20,000 for your project. A bank gives you the following terms:

six months at 8% interest, with a 10% compensating balance.

How much will you need to borrow?

$18,000

$2000

$20,000

$22,222