A parent company uses the partial equity method to record its investment in its subsidiary internally. A comparison for 3-year investment income between the equity method and the partial equity method was developed when the parent prepared the consolidation worksheet in Year 4 as follows: Investment Income (3-year total) Equity method $ 600,000 Partial equity method $642,000 To switch back to the equity-method basis, which of the following is TRUE regarding the conversion consolidation entry (i.e., consolidation entry *C) in Year 4? "Equity in subsidiary's income" needs to be debited by $42,000. "Investment in subsidiary" needs to be credited by $42,000. "Retained earnings" needs to be credited by $42,000. "Additional Paid-in capital" needs to be debited by $42,000.

A parent company uses the partial equity method to record its investment in its subsidiary internally. A comparison for 3-year investment income between the equity method and the partial equity method was developed when the parent prepared the consolidation worksheet in Year 4 as follows: To switch back to the equity-method basis, which of the following is TRUE regarding the conversion consolidation entry (i.e., consolidation entry C ) in Year 4 ? "Equity in subsidiary's income" needs to be debited by $42,000. "Investment in subsidiary" needs to be credited by $42,000. "Retained earnings" needs to be credited by $42,000. "Additional Paid-in capital" needs to be debited by $42,000