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24 September, 14:36

Wildcat Corporation reports a deficit in current E&P of ($200,000) in 20X3 and accumulated E&P at the beginning of the year of $100,000. Wildcat distributed $300,000 to its sole shareholder on December 31, 20X3. How much of the distribution is treated as a dividend in 20X3?

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  1. 24 September, 16:00
    0
    Zero or $0

    Explanation:

    Distribution is the company payment to its stockholders in the form of cash, stock, physical product. It is further defined as the allocation of income and capital in a specific time period.

    Beginning Accumulated E&P = $100,000

    E&P in the year = ($200,000)

    By adding the beginning & current year E&P we will have the accumulated E&P in the year.

    Accumulated E&P = $100,000 + ($200,000) = ($100,000)

    As the accumulated E&P is negative so, the Wildcat distribution will not be classified as dividend payment.

    Zero distribution is treated as a dividend in 20x3.
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