If the equity method is being used cash dividends received
A) are credited to Dividend Revenue.
B) require no entry because investee net income has already been recorded at the proper proportion on the investor's books.
C) are credited to the Stock Investments account.
D) are credited to the Revenue from Stock Investments account.

Question

Quizplus · Accepted Answer

When the equity method is being used, cash dividends received are credited to the Stock Investments account. This account reflects the investor's share of the investee's equity and is adjusted over time as the investment is revalued for changes in the investee's earnings or losses. Dividend revenue is not recognized on the investor's books until the investee declares a dividend, and it is contingent on the investor's proportionate share of the investee's profits.

If the Equity Method Is Being Used Cash Dividends Received