Noler Company owns 28% of Lauer Company. For the current year, Lauer reports net income of $197,000 and declares and pays a $55,000 cash dividend.
Record Noler's equity in Lauer's net income and the receipt of dividends from Lauer for December 31.
When a company obtain a significant influence over another company, equity method of accounting for investment must be used. Where income increases the balance of Investment Account and dividends decreases the investment account balance.
Answer and Explanation:
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from CFP Certification Exam Study Guide - Certified Financial PlannerChapter 8 / Lesson 1