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Stormy Ltd Has Purchased All the Issued Capital of Cloud

Question 19

Multiple Choice

Stormy Ltd has purchased all the issued capital of Cloud Ltd at the beginning of the current period. At the end of the period Cloud Ltd declares a dividend of $50,000 that is identified as being paid out of pre-acquisition profits. What entries would Stormy Ltd and Cloud Ltd make in their own books? (Assume Stormy Ltd accrues the dividends of subsidiaries when they are declared.)


A) Stormy Ltd has purchased all the issued capital of Cloud Ltd at the beginning of the current period. At the end of the period Cloud Ltd declares a dividend of $50,000 that is identified as being paid out of pre-acquisition profits. What entries would Stormy Ltd and Cloud Ltd make in their own books? (Assume Stormy Ltd accrues the dividends of subsidiaries when they are declared.) A) B) C) D) E) None of the given answers.
B) Stormy Ltd has purchased all the issued capital of Cloud Ltd at the beginning of the current period. At the end of the period Cloud Ltd declares a dividend of $50,000 that is identified as being paid out of pre-acquisition profits. What entries would Stormy Ltd and Cloud Ltd make in their own books? (Assume Stormy Ltd accrues the dividends of subsidiaries when they are declared.) A) B) C) D) E) None of the given answers.
C) Stormy Ltd has purchased all the issued capital of Cloud Ltd at the beginning of the current period. At the end of the period Cloud Ltd declares a dividend of $50,000 that is identified as being paid out of pre-acquisition profits. What entries would Stormy Ltd and Cloud Ltd make in their own books? (Assume Stormy Ltd accrues the dividends of subsidiaries when they are declared.) A) B) C) D) E) None of the given answers.
D) Stormy Ltd has purchased all the issued capital of Cloud Ltd at the beginning of the current period. At the end of the period Cloud Ltd declares a dividend of $50,000 that is identified as being paid out of pre-acquisition profits. What entries would Stormy Ltd and Cloud Ltd make in their own books? (Assume Stormy Ltd accrues the dividends of subsidiaries when they are declared.) A) B) C) D) E) None of the given answers.
E) None of the given answers.

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