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Pre-acquisition dividend

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ACCOUNTANT

Student

552 Points Posted on 02 March 2020

We subtract preacquisition dividend (equity) from both investment and simultaneously p&l doesn't it nullify the effect of dividend totally.. . Please explain. ..

And also we add dividend receivable of preference shares to p&l is this not against fundamental accounting concept prudence??

Replies (12)

Quick Summary

This discussion delves into the accounting treatment of pre-acquisition dividends. Participants question whether subtracting these dividends from both investment and P&L effectively nullifies their impact. The conversation also touches upon adding preference share dividend receivables to P&L and its potential conflict with the prudence concept. Clarification is sought regarding the existence and treatment of pre-acquisition profits versus reserves.

sabyasachi mukherjee

Profession

19978 Points Posted on 04 March 2020

Pre acquisition dividend does not exist..

Kapadia Pravin

10683 Points Posted on 04 March 2020

Pre acquisition dividend is the dividend received out of pre-acquisition profits.

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

This is within fundamental accounting Prudential concept.

sabyasachi mukherjee

Profession

19978 Points Posted on 05 March 2020

Pre acquisition profit is there.Interm Dividend is there. Any pre acquisition profit can be divided among existing shareholders/stakeholders.
Now a company cannot raise an IPO within few months of incorporation.

Kapadia Pravin

10683 Points Posted on 05 March 2020

Again what that Chap wrote in above post ??

Has anyone understood !!
If yes please re-explain..

Is that reply of Query ?

@ Admin
Please moderate his Posts.

sabyasachi mukherjee

Profession

19978 Points Posted on 05 March 2020

There is no accounting concept..

1. pre acquisition profit exists in a subsidiary company ...
who told u?

you are absolutely wrong...

reserves exist in every company.

Kapadia Pravin

10683 Points Posted on 06 March 2020

The above post chap has now started to reply blindly.

Please double read previous replies and then jump.

@ Admin,
Please moderate posts by that Chap .