[nzawkhun114]

Hello Sir,
Should I eliminate dividend paid or received either by the parent or the subsidiary to a company outside of the group.

[nzawkhun114]

Hello Sir, Could you explain me how to handle dividend inthe following problem.

The following figures relate to the draft profit or loss accounts of Courage Ltd and
Brains Ltd. for the period ending 31 December, 2016:

Courage Ltd Brains Ltd.
£’000 £’000
Turnover 3,000 900
Cost of Sales (1,700) (600)
Gross profit 1,300 300
Operating costs (900) (197)
Operating profit 400 103
Loss on sale (50) (10)
of fixed assets
Dividends from 8 2
quoted companies
Profit (BIT) 358 95
Interest 2 (3)
receivable/payable
Profit before tax 360 92
Tax (160) (40)
Profit for the period 200 52
Retained profits b/f 100 25
Proposed dividends (20) (4)
Retained profits c/f 280 73

Other information:
– Courage Ltd. had acquired 60% of Brains Ltd. ordinary shares and has a controlling interest.
– In December, 2016, Brains Ltd. invoiced goods to Courage Ltd. £10,000 making £2.000 profit and these are included in the stocks of Courage Ltd.

Required:
Prepare the consolidated profit and loss account for Courage Ltd. for year ended 31 December, 2016.

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