Omar Corporation uses the equity method to account for its 25% investment in Limpit Corporation and receives $15,000 in dividends. How should Omar account for these dividends?

Name: Omar Corporation uses the equity method to account for its 25% investment in Limpit Corporation and receives $15,000 in dividends. How should Omar account for these dividends?
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Question

Quizplus · Accepted Answer

Under the equity method, dividends received are considered a return on investment and reduce the carrying amount of the investment, not income.

Omar Corporation Uses the Equity Method to Account for Its