Your Ask Joey ™ Answer

What is a liquidating dividend and a nonliquidating dividend?

Dividends from equity securities will either be deemed liquidating or nonliquidating dividends. Think of liquidating dividends as dividends that are in excess of that particular investors overall share of the retained earnings that they are entitled to. Nonliquidating dividends are normal dividends that should be recognized in net income. Nonliquidating dividends are not distributions in excess of that particular shareholders share of retained earnings.

Back To All Questions

You might also be interested in...

  • Discontinued Operations on the FAR CPA Exam

    Overview of Discontinued Operations In financial reporting, discontinued operations refer to a component of a company’s core business or product line that have been divested or shut down. Discontinued operations will be reported (net of tax) separately from continuing operations on the income statement. The reason that discontinued operations are reported separately is so that...

  • Equity Method Excel Workbook

    If you would like to use the Excel workbook that was used to create the Universal CPA lecture on the equity method, please click the link below to download the Excel workbook: Equity Method Lecture Example

  • How Hard is the CPA Exam?

    So you’re thinking about taking the CPA exam? Whether you have a dream of becoming a tax advisor, feel as though you need public accounting experience, or just want to solidify your business acumen, the CPA license is one of the most prestigious and well respected licenses in the business world. The exam itself is...