If the equity method is being used, the Revenue from Investment in Associates account is
A)another name for a Dividend Revenue account.
B)credited when dividends are declared by the investee.
C)credited when profits are reported by the investee.
D)debited when profits are reported by the investee.

Question

Quizplus · Accepted Answer

Revenue from Investment in Associates account is credited when profits are reported by the investee because it represents the investor's share of the profits earned by the investee. This is in accordance with the equity method of accounting for investments in associates. Option A is incorrect because Revenue from Investment in Associates is not the same as Dividend Revenue account. Option B is incorrect because dividends received are recorded as a reduction in the investment amount, not as revenue. Option D is incorrect because the account is credited, not debited.

If the Equity Method Is Being Used, the Revenue from Investment