Solution The investee\'s net income should be recorded as an increase to the investment account. False Explanation Not all the net income of investee is recorded as an increase to investment account. Only the part of net income proportionate to investor share is recorded as increase in investment account. For example if investor have 30% share in investee company and the net income of investee is 100000 then only 30000 will be recorded as an increase in investment account.