💰 CPA Exam Prep

Under the equity method, the investor:

A Records dividends as income
B Adjusts the investment account for the investors share of investee net income/loss
C Consolidates financial statements
D Ignores investee results

✓ Correct Answer: Option B

Equity method: investment increases by share of investee income, decreases by dividends received. Used for 20-50% ownership.

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