All dividends paid or payable by an investee to an investor are to be recognized as revenue by the investor when the investor is also a parent company and will be preparing consolidated financial statements.

Question

Quizplus · Accepted Answer

This statement is true according to the Generally Accepted Accounting Principles (GAAP) for consolidated financial statements. The dividends paid or payable by the investee to the parent company are recognized as revenue in the parent company's financial statements, as they represent a return on investment to the parent. This is then included in the consolidated financial statements, which show the overall financial performance of the parent company and its subsidiaries.

All Dividends Paid or Payable by an Investee to an Investor