Asked by
shenamae solamo
on Dec 16, 2024Verified
Under the equity method of accounting for an investment
A) Dividend Income is credited when dividends are received.
B) an Unrealized Gain account is credited when the investee reports net income.
C) the Investment account is credited when the investee reports net income.
D) the Investment account is credited when dividends are received.
Unrealized Gain
An increase in the value of an asset that has not been sold, hence the gain is not reflected in the financial statements as actual profit.
Equity Method
An accounting technique used by a company to record its investment in another company based on the profit or loss and changes in the investee's equity.
Dividend Income
Earnings received from owning shares in a company, typically distributed from the company's profits.
- Distinguish between the cost method, equity method, and fair value models for accounting investments.
Verified Answer
BR
Learning Objectives
- Distinguish between the cost method, equity method, and fair value models for accounting investments.