Assertion (A): Dividend paid out of pre-acquisition profit by the subsidiary company to the holding company is deducted from the cost of investment

Reason (R): Dividend paid out of pre-acquisition profit by the subsidiary company should be treated as a return of capital to the holding company. Which one of the following is correct?

A

Both (A) and (R) are correct
B

(A) is correct, but (R) is wrong
C

(A) is wrong, but (R) is correct
D

Both (A) and (R) are wrong

Question