Question

Equity method for investments – recording

Zach Company owns 40% of the voting stock of Tomas Corporation and uses the equity method in recording this investment. Tomas Corporation reported a $20,000 net loss.Zach Corporation's entry would include a:
1) Credit to the investment account for $8,000
2) Debit to the investment account for $20,000
3) Debit to the investment account for $8,000
4) Debit to a loss account for $8,000

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