At the Date of Acquisition, a Subsidiary Had Recorded a Dividend

question 25

Multiple Choice

At the date of acquisition, a subsidiary had recorded a dividend payable of $10 000. Assuming that the shares were acquired on a cum div. basis, the consolidation adjustment needed at the date of acquisition to eliminate the dividend is:
I. Dr Dividend payable $10 000
Cr Dividend receivable $10 000
II. Dr Dividend revenue $10 000
Cr Dividend declared $10 000
III. Dr Shares in subsidiary $10 000
Cr Dividend receivable $10 000
IV. Dr Dividend receivable $10 000
Cr Dividend payable $10 000

• A) I.
• B) II.
• C) III.
• D) IV.

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Definitions:

Income Inequality

The unequal distribution of an economy’s total income among households or families.

Minimum Standard

A predefined level of quality, performance, or capability that products, services, or processes must meet or exceed, often set by regulatory bodies.

Marginal Tax Rate

The marginal tax rate is the percentage of tax applied to your income for each tax bracket in which you qualify, essentially the tax rate on your last dollar of income.

Progressive Tax

A tax system in which the tax rate increases as the taxable amount increases, often aimed at ensuring tax equity.