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Post acquisition dividend

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ACCOUNTANT

Student

552 Points Posted on 22 February 2020

If a stake of 30% is acquired in a company on 01-06-2009 and dividend is declared on 12-08-2009..., will such dividend declared be treated as pre-acquisition dividend or post-acquisition dividend..??? kindly clarify ...thank you

Replies (2)

Quick Summary

This discussion clarifies the treatment of dividends declared after a company stake acquisition. A dividend declared after the acquisition date, even if from profits of a prior financial year, is generally considered a post-acquisition dividend. The key factor is the declaration date relative to the acquisition date, not the profit period. Dividends received from pre-acquisition profits are termed 'pre-acquisition dividends' and should typically be credited to the Profit & Loss Account.

ACCOUNTANT

Student

552 Points Posted on 22 February 2020

though it is pertaining to the year 2008-09.,.. is there any change if it is interim dividend

Rama chary Rachakonda

Master in Accounts & high court Advocate

7021 Points Posted on 22 February 2020

When the dividend is declared from pre-acquisition profits, and later on received by purchaser of investment. Dividend received out of pre-acquisition profits is referred as pre-acquisition Dividends.

Dividend received out of post-acquisition profits is referred as post-acquisition dividend. Acquisition Dividend if received should be credited to Profit & Loss Account.