In the installment acquisition of a controlling interest in a subsidiary, the Retained Earnings of Subsidiary/Investee ledger account is first credited in a journal entry of the parent company/investor to:

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The Retained Earnings of Subsidiary/Investee ledger account is first credited in a journal entry of the parent company/investor to apply retroactively the equity method of accounting. This method is used when the parent company has significant influence over the investee, typically indicated by owning more than 20% but less than 50% of the voting stock. However, when a controlling interest is acquired, even if over multiple installments, the full consolidation method becomes applicable, and the equity method may be used initially for partial acquisitions leading up to control. Retroactive application adjusts the parent's investment and retained earnings to reflect its share of the subsidiary's earnings and dividends since the acquisition date.

In the Installment Acquisition of a Controlling Interest in a Subsidiary