When a property dividend is declared, the reduction in retained earnings is for:

-The book value of the property on the date of declaration

-The book value of the property on the date of distribution

-The fair value of the property on the date of distribution

-The fair value of the property on the date of declaration

Question

Maren Wolf

Business

8 January, 15:59

When a property dividend is declared, the reduction in retained earnings is for:

-The book value of the property on the date of declaration

-The book value of the property on the date of distribution

-The fair value of the property on the date of distribution

-The fair value of the property on the date of declaration

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Answers (1)

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Tania Sweeney · Answer 1

The reduction in the retained earning is for the fair value of the property on the date of the declaration.

Answer: Option D.

Explanation

Dividend is the amount of money that is distributed as a form of profit or the surplus money to the share holders by the corporation.

When the dividend on the property is to be declared, the retained earning is reduced for the fair value of the property. This is done on the day when the dividend is declared. Fair value of the property is the value at which the property is to be exchanged between the willing parties.