Question

When dividend is declared from pre-acquisition profits and later on received by the purchaser of the investment (shares) then such amount of dividend is​

Answer 1

Explanation:

Dividend received from the subsidiary company out of pre-acquisition profits. Thus the holding company deducts the amount of dividend received out of pre-acquisition profits from the balance of shares in subsidiary company account.

Answer 2

Answer:

Dividend is declared from pre-acquisition profits and later on received by the purchaser of the investment (shares) then such amount of dividend is​ amount of dividend earned from pre-acquisition profits is deducted from the balance of shares in the subsidiary company account by the holding company .

Explanation:

The subsidiary company's dividend or pre-acquisition earnings should be viewed as a return of capital to the controlling company. The total of a company's announced dividends for each ordinary share outstanding is known as dividend per share (DPS). DPS is computed by dividing the total dividends paid out by a company, including interim dividends, by the number of outstanding ordinary shares issued over a period of time, usually a year.