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why dividends received recorded by a negative sign but net income not?

Fair Value/Cost and Equity Method Accounting Procedures Assume that Pop Corporation acquires 2,000 of the 10,000 outstanding shares of Son Corporation at $25 per share on July 1. Assume the book value and fair value of Sons assets and liabilities are equal. Further, the cash paid equals 20 percent of the fair value of Sons net assets. Sons net income for the fiscal year ending December 31 is $25,000, and dividends of $10,000 are paid on November 1. If there is evidence of an inability to exercise significant influence, Pop should apply the fair value/cost method, revaluing the investment account to fair market value at the end of the accounting period. Otherwise, the equity method is required. Accounting by Pop under the two methods is as follows: Equity Method Investment in Son (+A) 50,000 Cash (-A) 50,000 Entry on July 1 to Record the Investment: Fair Value/Cost Method Investment in Son (+A) 50,000 Cash (-A) 50,000 Entry on November 1 to Record Dividends: Fair Value/Cost Method Cash (+A) 2,000 Dividend income (R, +SE) 2,000 Entry on December 31 to Recognize Earnings: Fair Value/Cost Method None (Assume that the stock is either nonmarketable or has a market price = $25 per share so that no revaluing is needed.) Equity Method Cash (+A) 2,000 Investment in Son (-A) 2,000 Equity Method Investment in Son (+A) 2,500 Income from Son (R, +SE) (25,000 X 1/2 year X 20%) 2,500 Under the fair value/cost method, Pop recognizes income of $2,000 and reports its investment in Son at its $50,000 cost at December 31. Under the equity method, Pop recognizes $2,500 in income and reports the investment in Son at $50,500 at December 31. Here is a summary of Pop's equity method investment account activity: July 1 November 1 $50,000 (2,000) December 31 Initial cost Dividends received Recognize 20% of Son's net income for 1/2 year Ending balance 2,500 $50,500 December 31

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