Question

pre acquisition dividend received by holding company is credited to
profit and loss ac
capital profit
investment ac
none of above?​

Answer 1

Answer:

Dividends paid out of pre- acquisition profits must be credited to investment in shares of the subsidiary account. True ... profits must be credited to profit and loss account.

Explanation:

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Answer 2

It is credited to Investment A/c

• It is the dividend paid out of pre-procurement earnings. Such a profit in subsidiary is considered as a capital profit.
• The reserves existing in a subsidiary firm at the time when it is typically bought are the pre-acquisition gain and dividend is usually subtracted from the investment's cost.
• The economic dividend received by the holding company prior to the purchase is credited to the account of the business's direct investment in proper shares.