When a Company Applies the Initial Method in Accounting for Its

Multiple Choice

When a company applies the initial method in accounting for its investment in a subsidiary and the subsidiary reports income in excess of dividends paid, what entry would be made for a consolidation worksheet? $$\begin{array} { | l | c | } \hline \text { A) } & \text { Retained earnings } \\\hline & \text { Investment in subsidiary } \\\hline \text { B) } & \text { Investment in subsidiary } \\\hline & \text { Retained earnings } \\\hline \text { C) } & \text { Investment in subsidiary } \\\hline & \text { Equity in subsidiary's income } \\\hline \text { D) } & \text { Equity in subsidiary's income } \\\hline & \text { Investment in subsidiary } \\\hline \text { E) } & \text { Additional paid-in capital } \\\hline & \text { Retained earnings } \\\hline\end{array}$$

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