From an investor's point of view,a liquidating dividend from an investee is:
A) A dividend declared by the investee in excess of its earnings in the current year.
B) A dividend declared by the investee in excess of its earnings since acquisition by the investor.
C) Any dividend declared by the investee since acquisition.
D) A dividend declared by the investee in excess of the investee's retained earnings.

Question

Quizplus · Accepted Answer

A liquidating dividend is a dividend paid out from the investee's accumulated earnings and profits from before the investor acquired the shares. This means that the dividends paid out are in excess of the investee's earnings since acquisition by the investor. Therefore, choice B is the best answer.

From an Investor's Point of View,a Liquidating Dividend from an Investee