Under the equity method, all dividends (except stock dividends) declared by the subsidiary are treated as a liquidation of the investment.

Question

Quizplus · Accepted Answer

Under the equity method, dividends received from the investee are considered a return on investment and thus reduce the carrying amount of the investment on the investor's books, effectively treating them as a partial liquidation of the investment.

Under the Equity Method, All Dividends (Except Stock Dividends) Declared