Under the equity method of accounting for investments, dividends paid by the investee are recorded by the investor as:

Question

Quizplus · Accepted Answer

Under the equity method, dividends paid by the investee to the investor are recorded as a reduction in the carrying amount of the investment. Therefore, dividends are credited to the Investment account, reducing the balance of the investment on the investor's books.

Under the Equity Method of Accounting for Investments, Dividends Paid