Answer:
As per the equity method, the investor do not treat dividend as revenue rather they record the receipt of dividend as a carrying value of investment.
Explanation:
As per the equity method, the investor do not treat dividend as revenue rather they record the receipt of dividend as a carrying value of investment. An investor´s account decrease as a dividend is collected, because distribution of cash dividend reduce the carrying amount of investee company.
The double entry for this transaction would be:
Dividend received------- Dr
Carrying amount of investment-------Cr
A parallel is established between investment account and the underlying activities of the investee.
