When a Company Applies the Initial Value Method in Accounting

Multiple Choice

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?
A. Retained earnings
Investment in subsidiary

B. Investment in subsidiary
Retained earnings

C. Investment in subsidiary
Equity in subsidiary's income

D. Investment in subsidiary
Additional paid-in capital

E. Retained earnings
Additional paid-in capital

A) A above
B) B above
C) C above
D) D above
E) E above