The journal entry required to record the receipt of dividends under the fair value method of accounting for investments includes a
A)credit to the investment account.
B)debit to the investment account.
C)credit to dividend income.
D)debit to retained earnings.

Question

Quizplus · Accepted Answer

Under the fair value method of accounting for investments, dividends received are recognized as dividend income. Therefore, the journal entry would include a credit to the dividend income account. There would be no debit or credit to the investment account or retained earnings.

The Journal Entry Required to Record the Receipt of Dividends