Question

What is Pre Acquisition dividend in Investment Accounting ? and what are their Accounting Treatment ?​

Answer 1

Explanation:

Pre-acquisition profits are the reserves which exist in a subsidiary company at the date when it is acquired. Post-acquisition profits are profits made and included in the retained earnings of the subsidiary company since acquisition. Pre-acquisition dividend is generally deducted from the cost of the investment.

Answer 2

Answer:

Dividend received from the profit of past year on the share acquired during the year is known as Pre acquisition dividend.

Pre Acquisition dividend is adjusted through the cost of purchase accordingly cost of purchase will get reduced by amount of dividend received on such share from past year profit.