An Investor Uses the Cost Method of Accounting for Its

question 38

Multiple Choice

An investor uses the cost method of accounting for its investment in common stock.During the current year,the investor received $25,000 in dividends,an amount that exceeded the investor's share of the investee company's undistributed income since the investment was acquired.The investor should report dividend income of what amount?

• A)$25,000 as a reduction in the investment account
• B)$25,000 less the amount in excess of its share of undistributed income since the investment was acquired
• C)$25,000 less the amount that is not in excess of its share of undistributed income since the investment was acquired
• D)$25,000 less recognized earnings

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