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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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For what reasons would a corporation restrict its retained earnings? How does it report a restriction?

To determine

State the reason under which the corporation will restrict its retained earnings and also state the manner by which the restriction is reported.

Explanation

Restriction of retained earnings:

Restriction of retained earnings are made when the board of directors makes commitment, that a portion of a portion of dividend is unavailable. These restrictions on assets are not placed by the policy framed but by the corporation which places the restriction...

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