The Long-term Investments account is debited for the receipt of a dividend on an equity method investment because the dividend increases the investee's equity.

Question

Quizplus · Accepted Answer

Under the equity method, dividends received are not recorded as income but rather reduce the carrying amount of the investment, so the Long-term Investments account is credited, not debited.

The Long-Term Investments Account Is Debited for the Receipt of a Dividend