Question: Presidential Realty Corporation reports the following regarding its distributions paid

Presidential Realty Corporation reports the following regarding its distributions paid on common stock: "Cash distributions on common stock were charged to paid in surplus because the parent company has accumulated no earnings (other than its equity in undistributed earnings of certain subsidiaries) since its formation."

Required:
a. Explain whether these cash distributions are dividends.
b. Speculate as to why Presidential Realty made such a distribution.


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  • CreatedJanuary 22, 2015
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