Under the equity method of accounting for investments,dividends paid by the investee are recorded by the investor as:

Question

Quizplus · Accepted Answer

Under the equity method of accounting for investments, the investor records its share of the investee's earnings as an increase to its Investment account. Similarly, dividends paid by the investee are credited to the investor's Investment account to reflect the reduction in the investee's retained earnings. Therefore, the correct answer is a credit to the Investment account of the investor company.

Under the Equity Method of Accounting for Investments,dividends Paid by the Investee