When applying the rules of the equity method,the Equity Investments account is credited for the receipt of a cash dividend because ________.

Question

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Under the equity method, a cash dividend from the investee is considered a return on the investment rather than income. Therefore, the receipt of a cash dividend decreases the carrying amount of the investment on the investor's books, leading to a credit to the Equity Investments account.

When Applying the Rules of the Equity Method,the Equity Investments