The cost method of accounting for stock
A) recognizes dividends as income
B) is only appropriate as part of a consolidation
C) requires the investment to be increased by the reported net income of the investee
D) requires the investment to be decreased by the reported net income of the investee

Question

Quizplus · Accepted Answer

The cost method of accounting for stock recognizes dividends received from the investment as income. This method is used when the investor has little to no influence over the investee, typically indicated by an ownership interest of less than 20%.

The Cost Method of Accounting for Stock