Parent Corporation owns a 80% interest in Sub Company, acquired several years ago at a cost equal to book value and fair value. Sub sells merchandise to Parent for the first time in 20X1, and some is unsold at December 31, 20X1. In computing income from the investee for 20X1 under the equity method, Parent uses which equation?

Select one:

a.

80% of Sub's income less 100% of the unrealized profit in Parent's ending inventory

b.

80% of Sub's income plus 100% of the unrealized profit in Parent's ending inventory

c.

80% of Sub's income less 80% of the unrealized profit in Parent's ending inventory

d.

80% of Sub's income plus 80% of the unrealized profit in Parent's ending inventory