If the cost method is used to account for a long-term investment in ordinary shares, dividends received should be

Question

Quizplus · Accepted Answer

Dividends received should be credited to the Dividend Revenue account because the cost method assumes that the investor has no significant influence over the investee and, therefore, the dividends received are considered a return on investment rather than a share of the investee's profits.

If the Cost Method Is Used to Account for a Long-Term