medium · Financial Accounting liabilities-bonds-payable
On December 31, 20X7, Jade Co. has an equity-method investment with a carrying amount of $150,000. Jade receives a dividend of $10,000 on January 5, 20X8, which was declared on December 20, 20X7.
How does this dividend affect the carrying amount at December 31, 20X7?
- The $10,000 is recognized as a current liability of the investor.
- It increases the carrying amount by $10,000 until the cash is paid.
- It reduces the carrying amount to $140,000.
- There is no effect until the cash is received in 20X8.
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