Problem

When an investor uses me equity method to account for investments in common stock, cash di...

When an investor uses me equity method to account for investments in common stock, cash dividends received by the investor 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)

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