When an investor owns 35% of the stock of another business, cash dividends received from the investee company are generally recorded by increasing the value of the Investment account.

Question

Quizplus · Accepted Answer

When an investor owns 20% to 50% of another company's stock, the equity method is typically used, where dividends received are recorded as a reduction in the investment account, not an increase.

When an Investor Owns 35% of the Stock of Another