Journal entry to record liquidating dividend

24 May

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When Company A (the investor) has significant influence over Company B (the investee)—but not majority voting power—Company A accounts for its investment in Company B using the equity method of accounting.

Company B is considered an of Company A in such circumstances, from Company A's perspective, but could be a freestanding, publicly traded corporation.

The interest period runs from the date of record to the date of payment.

As stated earlier, most dividends are paid out of retained earnings and are simply distributions to the stockholders of the corporate earnings.