Under the partial equity method, the parent recognizes income when
A) dividends are received from the investee.
B) dividends are declared by the investee.
C) the related expense has been incurred.
D) the related contract is signed by the subsidiary.
E) it is earned by the subsidiary.

Question

Quizplus · Accepted Answer

Under the partial equity method, the parent recognizes its share of the investee's net income based on the percentage of ownership held. The income is recognized when it is earned by the investee, not when dividends are received or declared, expenses are incurred, or contracts are signed.

Under the Partial Equity Method, the Parent Recognizes Income When