Equity Income

CFA Level II
#1

Looking at the upstream downstream sales BB in CFA curriculum.

Can I just confirm that when a question asked for equity income calculations we do not factor in the % ownership of dividends? All dividend related information has been omitted in the answer. Any clarification please.

#2

Dividends received on an equity investment are not income; they’re considered a return of capital, not a return on capital.

That’s the reason that you subtract them from the Investment in Affiliate account on the balance sheet.

1 Like
#3

Thanks Bill

#4

You’re welcome.