Stark Company, a 90% owned subsidiary of Parker, Inc., sold land to Parker on May 1, 2017, for $80,000. The land originally cost Stark $85,000. Stark reported net income of $200,000, $180,000, and $220,000 for 2017, 2018, and 2019, respectively. Parker sold the land purchased from Stark in 2017 for $92,000 in 2019. Both companies use the equity method of accounting.Which of the following will be included in a consolidation entry for 2018?
A. Debit investment in subsidiary for $5,000.
B. Credit land for $5,000.
C. Credit investment in subsidiary for $5,000.
D. Credit retained earnings for $5,000.
E. Debit retained earnings for $5,000.
Answer: D
Business
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