When the cost method is used to account for an investment, the carrying value of the investment is affected by

A) the dividend distributions of the investee
B) the periodic net income of the investee
C) the earnings and dividend distributions of the investee
D) neither the earnings nor the dividends of the investee

Cost Method

An accounting approach where the investment is recorded at its purchase cost without reflecting market value changes.

Carrying Value

Also known as book value, it's the amount at which an asset is recognized on the balance sheet after deducting accumulated depreciation or amortization.

Dividend Distributions

Dividend distributions are payments made by a corporation to its shareholders, usually derived from the company’s earnings, representing a portion of the profits.