Liquidating dividend journal entry example Free naked chatrandome

Whether you apply the DRD to deferred taxes on undistributed earnings is a judgment call.Accountants will generally advise you not to, since applying the DRD to undistributed earnings implies an expectation that those earnings will ultimately be distributed.The undistributed earnings give rise to a deferred tax liability ("DTL") payable when the earnings are ultimately distributed, or the investment is liquidated.

What journal entries does Company A make to record its proportionate share of Company B's earnings and the cash dividend?

When Company A (the investor) has significant influence over Company B (the investee)—but not majority voting power—Company A accounts for its investment in Company B using the equity method of accounting.

Company B is considered an of Company A in such circumstances, from Company A's perspective, but could be a freestanding, publicly traded corporation.

(Numerous companies have done away with this provision.)Paid a dividend prior to any distribution to common stockholders, and the dividend is more or less expected each period.

The amount of the dividend is usually stated as a percentage of the preferred stock’s “par value.” Furthermore, preferred stock is frequently In the event of a corporate liquidation, to be “paid-off” before common shareholders.

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