Liquidating dividend accounting
The company must use its retained earnings balance of 0,000 first and the remainder of the dividend, 0,000 (0,000 - 0,000), will come from the company's paid-up capital.
Let's examine the impact of this dividend payment on Sharon.
We've then written off the investment (Cr investment, Dr P&L).
Just wanted to know what I need to disclose in relation to this, and how this should look in the P&L.
Hi, I'm just looking for a bit of guidance regarding the accounting treatment of a liquidation in the holding company under (old) UK GAAP.
The entity was liquidated, resulting in a dividend payable to the holding company comprising the net assets of the subsid (Cr dividend income, Dr interco debtor).
For example, if Tablet Universe's management believes the company is worth 0 million but the highest offer it receives to purchase the company is 0 million, it may decide to liquidate by selling all of the company assets (items of value that it owns) and pay its liabilities (debts that it owes) instead.
It could also pay a liquidating dividend if it chooses to close voluntarily or it is forced to close in the event of bankruptcy where it doesn't have enough assets to pay all of its outstanding liabilities.
Sharon has only received regular dividends before and is not familiar with a liquidating dividend. Regular dividends are distributions of the company's profit that the company pays to its shareholders or owners.
A company could also pay a liquidating dividend if management decides to close voluntarily or if the business goes into bankruptcy and is unable to pay its outstanding debts to its creditors such as its suppliers, employees and the bank. We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities.
You can test out of the first two years of college and save thousands off your degree.
Since liquidating dividends represent a return of a shareholder's original investment, they are usually not taxed when received by the shareholder.
A company will pay liquidating dividends if management believes the market is not valuing the business favorably if it is trying to sell it.
Search for liquidating dividend accounting:
A company pays liquidating dividends to its shareholders after it has paid its obligations to its creditors or the individuals to whom it owes money such as suppliers, banks for loans, employees and the government for tax payments.