When an investor is using the equity method and the investee reports a net loss, the journal entry will include a
A) debit to the Investment account.
B) debit to Retained Earnings.
C) credit to the Investment account.
D) credit to Investment Income or Loss.

Question

Quizplus · Accepted Answer

When an investor is using the equity method and the investee reports a net loss, the investor records a credit to the Investment account to decrease its value, reflecting the proportionate share of the loss.

When an Investor Is Using the Equity Method and the Investee