Question

Encore Industries owned investment securities with a book value of $45 million on August 12. At that time, Encore’s board of directors declared a property dividend consisting of these securities. The fair value of the securities was as follows:
Declaration – August 12$58million
Record date – September 1 62million
Distribution date – September 20 60million
What amount of gain should Encore recognize in earnings in connection with this property dividend?

Answer 1

Answer$13m

Explanation:

It's the declared dividend on the date declared, that is obligatory for payment by a company. What happens there after are normal trading activities.