Under the equity method of accounting for an investment:
A) The investment account remains at initial value.
B) Dividends received are recorded as revenue.
C) Goodwill is amortized over 20 years.
D) Income reported by the subsidiary increases the investment account.
E) Dividends received increase the investment account.

Question

Quizplus · Accepted Answer

Under the equity method, the investor recognizes its share of the investee's income, which increases the investment account.

Under the Equity Method of Accounting for an Investment