Liquidating Dividends
Normally in situations where the firm or project has a defined life, e.g., extractive industries
- Dividend = Net Income + Accumulated Depletion charge
- Return of capital along with income.
- Treasury stock, retired shares are similar to a liquidating dividend in some ways.
- Journal entry for a liquidating dividend, date of declaration:
RE XX
Add’l Paid in Capital, C/S XX
Dividend payable XX