Under the equity method of accounting, dividends declared by a subsidiary are accounted for by the parent company as:

Question

Quizplus · Accepted Answer

Dividends declared by a subsidiary and received by the parent company under the equity method of accounting are considered a return on investment and thus reduce the carrying amount of the investment in the subsidiary on the parent's books. They are not recognized as revenue.

Under the Equity Method of Accounting, Dividends Declared by a Subsidiary