Final answer:
The parent company's share of a subsidiary's net income not distributed as dividends is credited to the 'Investment in Subsidiary' ledger account under the equity method of accounting.
Step-by-step explanation:
In the equity method of accounting for a subsidiary's operations, the parent company's share of the subsidiary's adjusted net income not distributed as dividends is credited in a closing entry to the Investment in Subsidiary ledger account. This accounting practice reflects the parent company's proportionate share of the earnings of the subsidiary, recognizing that the investment's value has increased due to the subsidiary's earnings. Such earnings increase the investment balance rather than recording as direct income like dividends would, illustrating the conceptual difference between owning shares for dividend yields and strategic equity investments where influence or control is exerted.