Zach Company owns 40% of the voting stock of Tomas Corporation and uses the equity method in recording this investment. Tomas Corporation reported a $20,000 net loss. Zach Corporation's entry would include a

Question

Quizplus · Accepted Answer

When using the equity method, the investor records its share of the investee's profits or losses. In this case, the investment account would be credit with Zach Corporation's share of the $20,000 net loss, which is $8,000 (40% of $20,000). Therefore, the correct answer is C, credit to the investment account for $8,000.

Zach Company Owns 40% of the Voting Stock of Tomas