A parent buys 32 percent of a subsidiary in one year and then buys an additional 40 percent in the next year. In a step acquisition of this type, the original 32 percent acquisition should be:

• a. Maintained at its initial value.
• b. Adjusted to its equity method balance at the date of the second acquisition.
• c. Adjusted to fair value at the date of the second acquisition with a resulting gain or loss recorded.
• d. Adjusted to fair value at the date of the second acquisition with a resulting adjustment to additional paid-in capital.