If the cost method is used to account for an investment in common stock, dividends received should be recorded only when 20% or more of the stock is owned. debited to the Stock Investments account. credited to the Dividend Revenue account. credited to the Stock Investments account.

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Brooke2015 Brooke2015

02-07-2021
Business

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If the cost method is used to account for an investment in common stock, dividends received should be recorded only when 20% or more of the stock is owned. debited to the Stock Investments account. credited to the Dividend Revenue account. credited to the Stock Investments account.

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Parrain Parrain · Answer 1 · 2021-07-04T03:32:24+02:00

Answer: credited to the Dividend Revenue account.

Explanation:

If a company is using the cost method is used to account for an investment in common stock, then that common stock should be treated as an asset. This means that dividends that come from that company will be seen as revenue so this would be recorded in the dividend revenue account.

It will be accounted for in the cashflow statement of the company as either investing cashflow or operating. This would depend on if the company is using IFRS or U.S. GAAP.