Intragroup dividend
In consolidated financial statements the group is presented as a single economic entity, so dividend income recorded by the parent from a consolidated subsidiary and the corresponding intragroup distribution are eliminated. Dividends paid to non-controlling shareholders are transactions with owners outside the parent’s interest and are treated separately. In the parent’s separate financial statements, accounting follows the relevant standards and policy.
Worked example
A subsidiary declares $100,000 of dividends, of which $80,000 is payable to its 80% parent and $20,000 to non-controlling shareholders. Eliminate the $80,000 intragroup dividend in consolidation; the $20,000 relates to non-controlling owners.
Common mistake
Including the parent’s $80,000 subsidiary dividend as group income or eliminating the $20,000 paid to non-controlling shareholders as though it were intragroup.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |