Which method of accounting for investments recognizes income when income is earned by the investee?

Question

Quizplus · Accepted Answer

The equity method recognizes income when income is earned by the investee. Under this method, the investor records its proportionate share of the investee's net income as an increase in the investment account on the balance sheet. Therefore, the equity method is the best choice for recognizing income from investments.

Which Method of Accounting for Investments Recognizes Income When Income