Where a Subsidiary Has Declared but Not Paid a Dividend

question 37

Multiple Choice

Where a subsidiary has declared but not paid a dividend on a cum div basis on acquisition date,the amount of the dividend must be recorded by the parent company as:

• A) revenue
• B) a reduction in the cost of the investment
• C) a reduction in the amount of goodwill on consolidation
• D) none of the above

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Definitions:

RRSP

A Registered Retirement Savings Plan, a tax-deferred retirement savings account available in Canada.

Annuity

A financial instrument designed to offer a steady flow of income to someone, mainly used for retirement purposes.

Quarterly

Pertaining to something that occurs every three months or four times a year.

Life Annuity

An insurance product that guarantees regular payments to the annuitant for life, in exchange for an initial investment.