[Anonymous]

If an entity accounts for it’s investment in a company using the equity method, it accounts for dividends on COMMON stock by debiting cash and crediting the investment in investee.

But if they receive dividends on PREFERRED shares, they credit this as dividend income? Is this correct?

[Anonymous]

Yep- if you're using the equity method, dividends received will always reduce the investment in investee. Preferred dividends are always dividend income

[Anonymous]

Yep- if you're using the equity method, dividends received will always reduce the investment in investee. Preferred dividends are always dividend income

[Author]

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