where do dividends of investee go under equity method? received, suddenly, reported, account, associates

comp_sci_kid

It will be

Cash - Debit
Investment Account - Credit.

dmrktrading

I suddenly realized that i dont know where dividends from associates get reported. I know its not on the income statement, and i know we subtract proportionate share of associate's dividends from the b/s account (eoy equity account = boy + share of income - share of dividends)

but where do we record the dividends received from associates?! cause we did receive dividends, so where do we put them?

spreads

Dividends are not reported as part of Income rather it is recorded as an outflow from the equity account. So the minority stake in the equity section is reduced by the amount of dividend paid out (as % of total dividend paid out by the associate).

Hope it makes sense

FinancialAnaly

You own 20%of the company, so you get 20% of NI, whether they pay dividend or not.

senlinlang

smileygladhands Wrote:
-------------------------------------------------------
> we put them in cash - we received a dividend
>
> we increase (debit) cash and decrease (credit) the
> investment.
>
> Net impact on total assets is -0-

We put them in cash via what? There has to be a inflow somewhere, no? Even if just netted out.

Thanks!

MiniMe7

you reduce the equity investment account on the balance sheet.

ie. you invest 500,000 in sub --- your investment account on BS is 500,000

next year they pay you 50,000 in divs --- investment account is now 450,000

brainsX

Dividends only affect the investment account on the balance sheet as everyone here has mentioned.

There is no impact on the income statement for dividends.

tianxin

Just remember that dividends are a return OF capital not a return ON capital.