Liquidating dividends effect on retained earnings dating website headlines for women
In events of liquidation, equity holders are later in line than debt holders to receive any payments.This means that bondholders are paid before equity holders.
In most cases in most jurisdictions no tax is payable on the accumulated earnings retained by a company.
However, this creates a potential for tax avoidance, because the corporate tax rate is usually lower than the higher marginal rates for some individual taxpayers.
whether it has distributed them as dividends or reinvested them in the business).
When reinvested, those retained earnings are reflected as increases to assets (which could include cash) or reductions to liabilities on the balance sheet.
Due to the nature of double-entry accrual accounting, retained earnings do not represent surplus cash available to a company.