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During the current year, a parent provides services costing it $100,000 to its wholly-owned subsidiary,...

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Accounting

During the current year, a parent provides services costing it $100,000 to its wholly-owned subsidiary, charging $140,000 for the services. At year-end, the subsidiary still owes the parent $5,000 for these services. How do these intercompany transactions affect the parent's equity in income for the year, assuming the parent uses the complete equity method to report its investment on its own books?

Select one:

A. $140,000 is added

B. $5,000 is added

C. $40,000 is deducted

D. No effect

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