When a company applies the initial value method in accounting for its investment in a subsidiary and the subsidiary reports income less than dividends paid, what entry would be made for a consolidation worksheet in the second year? A)Retained earnings Investment in subsidiaryB)Investment in subsidiary Retained earningsC)Investment in subsidiary Equity in subsidiary's incomeD)Investment in subsidiary Additional paid-in capitalE)Retained earnings Additional paid-in capital
A. B above.
B. A above.
C. E above.
D. D above.
E. C above.
Answer: B
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