Choice "B" is correct, No - No.Rule: Investor records as revenue its "share of the investee's earnings" (not "dividends received") under the equity method. Dividends from an investee company are recorded by the investor as a reduction in the carrying amount of the investment on the balance sheet of the investor. Changes in the market value of investee's common stock are not considered income to the parent under the equity method. Under the cost method, receipt of a dividend is recorded as income and does not affect the investment account.
