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:

Headache

A pain or discomfort occurring in any area of the head, often varying in intensity, cause, and duration.

Caffeine

A stimulant chemical found in coffee, tea, and certain other plants, known for its ability to enhance alertness and reduce fatigue.

Binge Drinking

Excessive consumption of alcohol within a short duration of time.

Addiction

A psychological or physical inability to stop consuming a chemical, drug, activity, or substance, even though it is causing psychological and physical harm.