What Would Be Errant's Journal Entry to Record Grub's Net

question 67

Multiple Choice

What would be Errant's journal entry to record Grub's Net Income for 2018?

• A)
• \[\begin{array} { | l | l | l | }
• \hline & \text { Debit } & \text { Credit } \\
• \hline \text { Investment in Grub } & \$ 81,000 & \\
• \hline \text { Equity method inc ome } & & \$ 81,000 \\
• \hline
• \end{array}\]
• B)
• \[\begin{array} { | l | l | l | }
• \hline & \text { Debit } & \text { Credit } \\
• \hline \text { Equity method inc ome } & \$ 90,000 & \\
• \hline \text { Investment in Grub } & & \$ 90,000 \\
• \hline
• \end{array}\]
• C)
• \[\begin{array} { | l | l | l | }
• \hline & \text { Debit } & \text { Credit } \\
• \hline \text { Investment in Grub } & \$ 90,000 & \\
• \hline \text { Equity method inc ome } & & \$ 90,000 \\
• \hline
• \end{array}\]
• D)No entry is requireD.Under the equity method, the subsidiary's net income is recorded as an increase to the investment asset account and as revenue in the income statement.