If the equity method is being used, the Revenue from Investment in Stock account is
A) just another name for a Dividend Revenue account.
B) credited when dividends are declared by the investee.
C) credited when net income is reported by the investee.
D) debited when dividends are declared by the investee.

Question

Quizplus · Accepted Answer

Revenue from Investment in Stock account is credited when net income is reported by the investee because the equity method involves recognizing the investor's share of the investee's net income as revenue. It is not the same as Dividend Revenue account, which is used to record the receipt of dividends from the investee. The account is not debited when dividends are declared by the investee.

If the Equity Method Is Being Used, the Revenue from Investment