Response to the following problem:
The following note to the consolidated financial statements for The Goodyear Tire and Rubber Co. relates to investments in affiliated companies: Goodyear's investments in 20% to 50% owned companies in which it has the ability to exercise significant influence over operating and financial policies are accounted for by the equity method. Accordingly, Goodyear's share of the earnings of these companies is included in consolidated net income (loss). Dividends received by the Company from its unconsolidated affiliates accounted for under the equity method was $2.8 million.
a. Is Goodyear required to use the equity method for these investments? Explain.
b. Journalize the entry for receipt of the dividend making the credit to Investment in Affiliates.