Question

Under the equity method, dividends received by the investor from the investee will decrease the investment’s carrying amount. That is, we credit "Equity investments." Why don't we credit "Dividend Revenue?"

Answer 1

Under Equity Method one company makes investment in another company's common stock.

so, whenever another company makes income, the proportionate share of income is credited by the investing company as Equity Income. So whole revenue is credited as Equity Income by the Investing comoany.

So, whenever dividend is received by the investing company it decreses the investment value. Because at the time of taking proportionate income we have already increased Investment Value.

So, we don't credit " Dividend Revenue "