Saddle Corporation Is an 80%-Owned Subsidiary of Paso Company

Multiple Choice

Saddle Corporation is an 80%-owned subsidiary of Paso Company. On January 1, 20X1, Saddle sold Paso a machine for $50,000. Saddle's cost was $60,000 and the book value was $40,000. The machine had a 5-year remaining life at the time of the sale. A consolidated balance sheet only is being prepared on December 31, 20X3. The retained earnings of the controlling interest requires which of the following adjustments?

A) Debit $4,000
B) Debit $6,000
C) Debit $3,200
D) Debit $4,800