Asked by Janysh Kudaibergenov on Jun 13, 2024
Verified
If the equity method is being used the Revenue from Stock Investments account is
A) just another name for a Dividend Revenue account.
B) credited when dividends are declared by the investee.
C) credited when net income is reported by the investee.
D) debited when dividends are declared by the investee.
Equity Method
An accounting technique used to record investments in other companies when significant influence is held but not complete control.
Revenue from Stock Investments
Income earned from the ownership of shares in other companies, including dividends received and gains from sales of these shares.
Investee
A company or entity in which an investor holds a minority stake, not sufficient to exercise control over it.
- Understand the equity method for accounting investments and its impact on financial statements.
Verified Answer
JH
Jametrius HeathJun 13, 2024
Final Answer :
C
Explanation :
Revenue from Stock Investments account represents the investor's share of the investee's net income. Therefore, it is credited when net income is reported by the investee, as per the equity method of accounting. Dividend revenue is recorded separately, and is not the same as Revenue from Stock Investments account.
Learning Objectives
- Understand the equity method for accounting investments and its impact on financial statements.