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Hello sir ,I have a question which I think it’s vital to share with you due to the lack of knowledge to deal this question sir . It’s not the whole question; it’s about a tiny part of it which is why we don’t take the investment income of parent when we’re doing the consolidated statement of p&l and just took only the share of profit from associate which is given in the adjustment. Thanks sir need ur help please.
Hi,
The investment income recorded in the parent is that received from the associate, it says so in part (iv) of the additional information. When we equity account for the associate, we record our share of the profits of the associate and as the dividend paid by the associate to the parent is paid out of those profits then we have to remove the dividend in the parent’s books as otherwise we would be double counting the dividend income. It would be included in the share of profit of associate and the investment income figure too.
Hope that clears it up for you, be on the look out for it in exam questions as it is regularly seen.
Thanks
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