When the cost method is used to account for a stock investment the carrying value of the investment is affected by

b. neither the earnings nor the dividends of the investee.

Explanation:

When the cost method is used to account for a stock investment, it means that in the books, the stock is to be recorded at the price it was purchased for.

This means that even if earnings and dividends accrue on the stock, it is not to change in value but should stay being recorded at the price it cost to acquire.

income statement is prepared in order to show the profits and loss of a business. in order to prepare the income statement she should collect all the income and expenses of the product with the cost of production.