_____ On 1/4/06, a subsidiary paid a cash dividend that had been declared on 12/30/05. Under the equity method, what is the effect of this payment on the parent's retained earnings-not the consolidated retained earnings?

Question

Quizplus · Accepted Answer

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, as they are not considered revenue or income by the parent.

_____ on 1/4/06, a Subsidiary Paid a Cash Dividend That