The receipt of dividends from an investment affects the investment account when which of the following methods is used?
A) cost method
B) equity method
C) fair value through profit or loss model
D) fair value through other comprehensive income model

Question

Quizplus · Accepted Answer

Under the equity method, dividends received from an investment decrease the carrying amount of the investment account because they are considered a return on investment.

The Receipt of Dividends from an Investment Affects the Investment