_____ On 12/29/05, a subsidiary declared a cash dividend that was paid on 1/2/06. Under the equity method, what is the effect of this declaration on the parent's retained earnings-not the consolidated retained earnings?

Question

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Under the equity method, dividends received from a subsidiary are considered a return on investment and reduce the carrying amount of the investment on the parent's books. They do not affect the parent's retained earnings directly.

_____ on 12/29/05, a Subsidiary Declared a Cash Dividend That