Explain Why Dividends Paid by Subsidiaries Out of Pre-Acquisition Profits

question 37

Essay

Explain why dividends paid by subsidiaries out of pre-acquisition profits will result in impairment of the parent company's investment in subsidiary asset.

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Definitions:

Temperament

The combination of innate traits that subconsciously influence an individual's behavior and reactions to the environment.

Humanist

A philosophical and ethical stance that emphasizes the value and agency of human beings, individually and collectively, often considered a central aspect of humanistic psychology.

Behaviorist

A psychologist who studies and applies principles of learning and behavior, emphasizing the role of environmental factors in shaping behavior.

Psychodynamic

A psychological perspective that analyzes how behavior springs from unconscious drives and conflicts.