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

question 20

Multiple Choice

At the date of acquisition, a subsidiary had recorded a dividend payable of $100 000. 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:

• A) I.
• B) II.
• C) III.
• D) IV.

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Definitions:

Acquiring Firms

Companies involved in the process of buying or merging with other companies to increase their size and capabilities.

Acquisition

The process by which one company takes over the control or ownership of another company, either through direct purchase, merger, or exchange of shares.

Target Firm

A company that is the object of a takeover attempt, whether friendly or hostile, by another company or corporate entity.

Incremental Value

The additional or extra value generated by undertaking a certain action or investment.