Chapter 1, Problem 1P

When an investor uses the equity method to account for investments in common stock, the investor’s share of cash dividends from the investee should be recorded as

  a.    A deduction from the investor’s share of the investee’s profits.

  b.    Dividend income.

  c.    A deduction from the stockholders’ equity account, Dividends to Stockholders.

  d.    A deduction from the investment account.

  (AICPA adapted)