Question

The cost method of accounting for stock: __________

a. recognizes dividends as income
b. is only appropriate as part of a consolidation
c. requires the investment be increased by the reported net income of the investee
d. requires the investment be decreased by the reported net income of the investee

Answer 1

Option a (recognizes.................income) is the correct answer.

Step-by-step explanation:

• The proportion of even more inventories is below 20 percent, therefore the firm sends dividends on the inventories which are incorporated into the personal income tax rate.
• Dividends paid mostly by the investor, not adjusting as necessary for the investor's total earnings, should be declared as compensation or earnings.

The provided situation is not connected with other possibilities. So the above option is the correct answer.