Dodge, Incorporated Acquires 15% of Gates Corporation on January 1

Dodge, Incorporated acquires 15% of Gates Corporation on January 1, 2013, for $105,000 when the book value of Gates was $600,000. During 2013 Gates reported net income of $150,000 and paid dividends of $50,000. On January 1, 2014, Dodge purchased an additional 25% of Gates for $200,000. Any excess cost over book value is attributable to goodwill with an indefinite life. The fair-value method was used during 2013 but Dodge has deemed it necessary to change to the equity method after the second purchase. During 2014 Gates reported net income of $200,000 and reported dividends of $75,000.
Which adjustment would be made to change from the fair-value method to the equity method?

A) A debit to additional paid-in capital for $15,000.
B) A credit to additional paid-in capital for $15,000.
C) A debit to retained earnings for $15,000.
D) A credit to retained earnings for $15,000.
E) A credit to a gain on investment.