Accounting & the 3 Statements
You own 25% of an investee (equity method). It earns $200 of net income and pays $80 of total dividends this year. Walk me through your three statements (ignore taxes).
Model answer
Income statement: pick up your share of earnings — 25% × $200 = +$50 of 'equity in earnings of affiliates' (one line, below operating income) → net income +$50. Cash flow statement: start at NI +$50;…
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