If a company owns 49% of the stock of another business, cash dividends received from the investee company are generally recorded by decreasing the value of the Investment account.

Question

Quizplus · Accepted Answer

This is true because the company only owns 49% of the stock, therefore it has less than 50% ownership and is considered an equity method investment. Under the equity method, cash dividends received should be recorded by decreasing the value of the Investment account.

If a Company Owns 49% of the Stock of Another