If the Parent Company Used the Equity Method to Account

Multiple Choice

If the parent company used the equity method to account for its investment and the subsidiary company showed a profit for the past year, the consolidation elimination entry required to remove a subsidiary's income from the parent's books prior to the preparation of consolidated financial statements would be:

A)
$$\begin{array} { | l | l | l | } \hline & \text { Debit } &\text { Credit } \\\hline \text { Equity method income - Parent } & \$ \$ \$ & \\\hline \text { Retained Earnings - Parent } & & \$ \$ \$ \\\hline\end{array}$$
B)
$$\begin{array} { | l | l | l | } \hline & \text { Debit} &\text {credit } \\\hline \text { Equity method income - Parent } & \$ \$ \$ & \\\hline \text { Investment in Subsidiary } & & \$ \$ \$ \$ \\\hline\end{array}$$
C)
$$\begin{array} { | l | l | l | } \hline & \text { Debit } &\text {credit } \\\hline \text { Equity method income - Parent } & \$ \$ \$ & \\\hline \text { Acquisition Differential } & & \$ \$ \$ \\\hline\end{array}$$