Anthony Company declared and paid $20,000 of dividends during 2011.The schedule of dividends follows: Anthony Company was acquired on June 1, 2011 by Google Company.Google acquired 100 percent of Anthony Company.Both companies have a December 31 fiscal year end.What is the amount of preacquisition dividends in 2011?

Question

Anthony Company declared and paid $20,000 of dividends during 2011.The schedule of dividends follows:  Anthony Company was acquired on June 1, 2011 by Google Company.Google acquired 100 percent of Anthony Company.Both companies have a December 31 fiscal year end.What is the amount of preacquisition dividends in 2011?

Quizplus · Accepted Answer

Since Google acquired 100% of Anthony Company on June 1, 2011, Google would be entitled to receive dividends declared and paid after that date. Therefore, the preacquisition dividends would be the dividends declared and paid before June 1, 2011. Looking at the dividend schedule, we see that $5,000 of dividends were declared and paid before June 1, 2011, and thus, the answer is B.

Anthony Company Declared and Paid $20,000 of Dividends During 2011