Under the equity method the Stock Investments account is increased when the
A) investee company reports net income.
B) investee company pays a dividend.
C) investee company reports a loss.
D) stock investment is sold at a gain.

Question

Quizplus · Accepted Answer

Under the equity method, the investor records its share of the investee company's net income as an increase to the Stock Investments account. Therefore, choice A is the correct answer as it reflects the situation where the investee company reports net income.

Under the Equity Method the Stock Investments Account Is Increased