MotorCity,Inc.purchased 40,000 shares of Shaw common stock for $232,000.This represents 40% of the outstanding stock.The entry to record the transaction includes a:

A) Debit to Debt Investments for $232,000.
B) Debit to Equity Method Investments for $232,000.
C) Credit to Equity Method Investments for $232,000.
D) Debit to Long-Term Investments-HTM for $232,000.
E) Debit to Short-Term Investment-AFS for $232,000.

Equity Method Investments

Accounting for investments in other entities where the investor has significant influence over the investee but does not fully control or own it, typically between 20% and 50% ownership.

Common Stock

A type of security that represents ownership in a corporation and gives holders voting rights and a share in the company's profits through dividends.

Outstanding Stock

The shares of a corporation that have been issued and are in the hands of the public.