Question
Company ABC owns 100% of the outstanding shares of Company XYZ, and accounts for the net income of Company XYZ using the Simple Equity Method.
Company ABC owns 100% of the outstanding shares of Company XYZ, and accounts for the net income of Company XYZ using the Simple Equity Method. When Company XYZ reports quarterly Net Income of $50,000 on 3/31/19 to company ABC, Company ABC will make a journal entry to:
a) Debit the Investment and Credit Investment Income $50,000
b) Debit Dividends Receivable and Credit Investment Income $12,500 as its only for a quarter of the year
c) Debit Investment Income and Credit the Investment $50,000
d) Company ABC will make no journal entry resulting from this transaction
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