Under the equity method of accounting for investments in the shares of another company, when a dividend is received from the investee company which of the following occurs?

Question

Quizplus · Accepted Answer

Under the equity method, dividends received from the investee lead to a decrease in the carrying amount of the investment. This is because these dividends are considered a return on investment, thus reducing the value of the investment on the investor's books.

Under the Equity Method of Accounting for Investments in the Shares