Stiller Company, an 80% owned subsidiary of Leo Company, purchased land from Leo on March 1, 2017, for $75,000. The land originally cost Leo $60,000. Stiller reported net income of $125,000 and $140,000 for 2017 and 2018, respectively. Leo uses the equity method to account for its investment.On a consolidation worksheet, having used the equity method, what adjustment would be made for 2018 regarding the land transfer?
A. Debit investment in Stiller for $15,000.
B. Credit retained earnings for $15,000.
C. Debit retained earnings for $50,000.
D. Debit retained earnings for $15,000.
E. Credit retained earnings for $50,000.
Answer: A
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