Choose the item that is TRUE regarding dividends received on equity security where the investor can exert "significant influence" over the investee.

GAAP prohibits dividends from being received by investors in such situations.

Dividends should be reported as an increase in the investor's income for the period.

Dividends should be recorded as an increase in the investor's security asset cost in such situations.

Dividends should be recorded as a decrease in the investor's security asset cost in such situations.

Dividends should be reported as a component of the investor's stockholders' equity.