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Dividends declared by a subsidiary are eliminated against dividend income recorded by the parent under the...

Dividends declared by a subsidiary are eliminated against dividend income recorded by the parent under the

a. partial equity method.

b. equity method.

c. cost method.

d. equity and partial equity methods.
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Answer #1

Answer : Option B (Equity Method)

Yes, under the equity method of calculation the dividends are not treated as income under this method. As a result of this the dividends declared by subsidiary are eliminated against dividend income recorded by the parent under this equity method. Therefore option B equity method is the correct answer.

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