Liquidating dividend equity method

In other words, this is a return on the investors investment in the company.

The business must be profitable or have a positive retained earnings account in order to make a regular dividend.

In business, consolidation or amalgamation is the merger and acquisition of many smaller companies into much larger ones.

In the context of financial accounting, consolidation refers to the aggregation of financial statements of a group company as consolidated financial statements.

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There may be amalgamations, either by transfer of two or more undertakings to a new company, or to the transfer of one or more companies to an existing company".

Consolidation is the practice, in business, of legally combining two or more organizations into a single new one.

Treatment to the acquired company: The acquired company records in its books the elimination of its net assets and the receipt of cash, receivables or investment in the acquiring company (if what was received from the transfer included common stock from the purchasing company).

Upon consolidation, the original organizations cease to exist and are supplanted by a new entity.

A parent company can acquire another company by purchasing its net assets or by purchasing a majority share of its common stock.

For example, if after the books are closed you found an expense from last year that was debited to an asset account, the correction must reduce the balance in Retained Earnings as follows: are distributions of noncash assets, such as stocks or bonds of other companies that the corporation owns.

An equity security is an investment in stock issued by another company.

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