The following comment appeared in the notes of Alvarado Corporations annual report: Such distributions, representing proceeds from

Question:

The following comment appeared in the notes of Alvarado Corporation’s annual report: “Such distributions, representing proceeds from the sale of James Buchanan, Inc. were paid in the form of partial liquidating dividends and were in lieu of a portion of the Company’s ordinary cash dividends.” How would a partial liquidating dividend be accounted for in the financial records?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...