Cash dividends received on stock investments with more than 20% ownership of the investee,but less than 50% ownership,should be credited to the Equity-method Investment Revenue account.

Question

Quizplus · Accepted Answer

For investments with 20% to 50% ownership, cash dividends received are generally treated as a return on investment and reduce the carrying amount of the investment on the balance sheet, rather than being recognized as dividend revenue. This is because the equity method of accounting is used, where the investor's share of the investee's earnings, not the dividends paid, is recognized as income.

Cash Dividends Received on Stock Investments with More Than 20