A Dividend Paid by a Subsidiary Out of Pre-Acquisition Profits

question 16

True/False

A dividend paid by a subsidiary out of pre-acquisition profits will always result in the parent company's investment in subsidiary asset being impaired.

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Definitions:

Comprehensiveness

The characteristic of being thorough and encompassing most or all parts or facets of something.

Objectivity

The quality of being unbiased, unprejudiced, and impartial.

Clarity

The quality of being easily understood, free from ambiguity, and expressed in a straightforward manner.

Diplomacy

The art and practice of conducting negotiations and maintaining relations between states or individuals in a tactful and effective manner.