Fennel owned 40 percent of Actual's common stock,and as a result,accounted for the investment using the equity method.After the fifth year of owning the stock,the investment account had a credit balance.This could only happen if Fennel

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The equity method of accounting for investments allows for the investment account to reflect the investor's share of the investee's earnings and losses, as well as dividends received. A credit balance in the investment account, under this method, could indeed result from net losses exceeding net income, dividends distributed in excess of accumulated earnings, or accumulated income being less than additional depreciation recorded due to asset value adjustments at the time of purchase. Therefore, any or a combination of these conditions could lead to a credit balance in the investment account.

Fennel Owned 40 Percent of Actual's Common Stock,and as a Result,accounted