Pre-acquisition dividends, Financial Accounting

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Pre-acquisition dividends

Pre-acquisition dividends may also arise in the following situations;

1) Where the holding company acquires the subsidiary company’s shares cum-dividend and thus dividends eventually received will all be pre-acquisition.

2) If the subsidiary company makes post-acquisition losses, and pays out dividends then this dividends are assumed share come out of the pre-acquisition profits and are thus pre-acquisitioned.

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