If a company reporting under ASPE decides to use the cost model to account for an investment in common shares, dividends received should be
A)credited to the Investment account.
B)credited to the Dividend Income account.
C)debited to the Investment account.
D)recorded only when 20% or more of the shares are owned.

Question

Quizplus · Accepted Answer

Under the cost model according to Accounting Standards for Private Enterprises (ASPE), dividends received from an investment in common shares are recognized as income when declared. Therefore, they should be credited to the Dividend Income account, not the Investment account. The percentage of shares owned does not affect how dividends are recorded under this model.

If a Company Reporting Under ASPE Decides to Use the Cost