When dividend is declared and paid by a subsidiary company out of pre-acquisition and post-acquisition profits, how will the same be dealt with in the books of a holding company?

Dividend received by the holding company out of pre-acquisition profits of the subsidiary company are credited to investment in shares of the subsidiary account thereby reducing the cost of control or increasing capital reserve. Dividend received out of the post-acquisition profits are treated as income and credited to profit & loss Account by the holding company. If dividend declared partly out of pre-acquisition profits and partly out of post-acquisition profits, the dividend received is divided into two parts in proportion to its declaration. The dividend pertaining to the first (i.e. capital profit) is credited to Investment Account and dividend pertaining to second part (i.e., revenue profits) is credited to Profit and Loss Account.