When using the equity method for investments in equity securities,the investor records the receipt of cash dividends as a debit to Cash and a Credit to the Equity Method Investment.

Question

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When using the equity method, the investor recognizes its share of the investee's net income or loss, which includes dividends declared by the investee. The receipt of cash dividends is recorded as a debit to Cash and a credit to the Equity Method Investment account, increasing the investment balance.

When Using the Equity Method for Investments in Equity Securities,the