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Acquisition Method and Dividends

Acquisition method dividends

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#1 elsurfo

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Posted 18 April 2014 - 06:48 PM

Dear folks,

 

I am using Becker to study for FAR.  I have learned about the cost method and equity method to account for dividends.  However, I feel the acquisition method does not quite explain how dividends are accounted for once you own more than 50% of a subsidiary. 

Can anyone shine a light on this, I am actually just curious, it isn't necessarily something I need to answer any questions at the moment.

 

Thanks.


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#2 bella.dreamer

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Posted 18 April 2014 - 09:22 PM

Intercompany transactions are eliminated in consolidations. Think about it, it makes no sense to record dividends paid to yourself.


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