The equity method of accounting for investments
A) requires a year-end adjustment to revalue the stock to lower of cost or market
B) requires the investment to be reported at its original cost
C) requires the investment be increased by the reported net income of the investee
D) requires the investment be increased by the dividends paid by the investee

Question

Quizplus · Accepted Answer

Under the equity method, the investment is increased by the investor's share of the investee's net income, reflecting the investor's proportionate share of the investee's earnings.

The Equity Method of Accounting for Investments