medium · Financial Accounting accounting-cycle-financial-statements
An investor uses the equity method. If the investee reports Other Comprehensive Income (OCI) of $40,000 due to foreign currency translation, how does the investor record its 25% share of this event?
- Debit 'Investment in Associate' and credit 'Equity in Earnings' (Net Income) for $10,000.
- Debit 'Investment in Associate' and credit 'OCI' for $10,000.
- No entry is made because OCI is not part of Net Income.
- The entire $40,000 is recorded in the investor's OCI.
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