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In this question:- 1)In the question they have taken A Ltd dividend as pre acquisition dividend. What is the logic behind? 2)why haven't they did any dividend adjustment in analysis of profit? In case of pre acquisition dividend then they should have reversed the dividend impact in post acquisition and deducted the dividend paid in pre acquisition right. Why haven't they did like that? 3)And what does the line mean "dividend declared on equity share capital for both previous and current year"
Answers (1)
The question is poorly framed. They have not told whether 10% is for each year or total for both years. The dividend has been declared at 10% for previous year and current year. Since dividend payable numbers are given, it is assumed that dividend has already been adjusted from the profit and loss account balance hence not adjusted again. It is also assumed that 10,00,000 of previous year balance is after dividend. You are conceptually correct and can ignore this question.
