If the equity method is used to account for a long-term investment in common stock,cash dividends received from the investee are recorded by the investor as:
A)a debit to Equity-Method Investment and a credit to Equity-Method Investment Revenue.
B)a debit to Cash and a credit to Dividend Revenue.
C)a debit to Dividend Receivable and a credit to Dividend Revenue.
D)a debit to Cash and a credit to Equity-Method Investment

Question

Quizplus · Accepted Answer

Under the equity method, cash dividends received from the investee reduce the carrying amount of the investment, so they are recorded as a debit to Cash and a credit to Equity-Method Investment.

If the Equity Method Is Used to Account for a Long-Term