Abler Company owns 40% of Saparo Company. Saparo Company paid $40,000 cash dividends for the year. Abler Company's journal entry to record the dividends includes a:

Question

Quizplus · Accepted Answer

Abler Company owns 40% of Saparo Company, which means it uses the equity method for accounting. Under this method, dividends received reduce the investment account. Therefore, Abler would credit Long-Term Investments for 40% of the $40,000 dividends, which is $16,000.

Abler Company Owns 40% of Saparo Company