Jones, Incorporated Acquires 15% of Anderson Corporation on January 1

Jones, Incorporated acquires 15% of Anderson Corporation on January 1, 2020, for $105,000 when the book value of Anderson was $600,000. During 2020 Anderson reported net income of $150,000 and paid dividends of $50,000. On January 1, 2021, Jones purchased an additional 25% of Anderson for $200,000. Any excess cost over book value is attributable to goodwill with an indefinite life. The fair-value method was used during 2020 but Jones has deemed it necessary to change to the equity method after the second purchase. During 2021 Anderson reported net income of $200,000, and reported dividends of $75,000.Which of the following is true regarding the change from the fair-value method to the equity method?

A) Jones must record a debit to additional paid-in capital for $200,000.
B) Jones must record a debit to additional paid-in capital for $15,000.
C) Jones must retrospectively apply the equity method to interests reported under the fair-value method.
D) Jones must record a debit of $200,000 to the Investment in Anderson Account.
E) Jones must record a credit of $15,000 to the Investment in Anderson Account.