Under the equity method of accounting for investments in common shares, when a dividend is received from the investee,
A) the Dividend Revenue account is credited.
B) the Investment account is increased.
C) the Investment account is decreased.
D) no entry is necessary.

Question

Quizplus · Accepted Answer

Under the equity method, dividends received from the investee are considered a return of investment, not income. Therefore, the Investment account is decreased when dividends are received.

Under the Equity Method of Accounting for Investments in Common