Roddick Holdings Inc.accounts for its investment in the common shares of Henry Ltd.using the equity method.Roddick should ordinarily record a cash dividend received from Henry as:

Question

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Under the equity method, cash dividends received from the investee (Henry Ltd.) are recorded as a reduction of the carrying value of the investment in Roddick Holdings Inc.'s financial records. This is because the dividends are considered a return on the investment, rather than income.