Question

Post acquisition dividend received by holding company is debited to​

Answer 1

Answer:

Dividends paid out of post-acquisition profits must be credited to profit and loss account.

Answer 2

It is debited to P&L Account.

• The potential profits made and added in the subsidiary's retained earnings since purchase are referred to as post-acquisition profits.

• The post acquisition period is the time period between the key acquisition of shares in a subsidiary firm and the balance sheet date of the holding company.

• The adjustment in such case is also represented to the parent's dividend revenue and the direct subsidiary's dividends paid. The dividend received is always credited to the Profit and loss Account.