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Hi sir, if let’s say in a consolidation question, they say that there is a dividend of $50 000 paid by an associate to a parent, before the year end. And the question asks us to find the ‘share of profit of associate’ in the statement of profit or loss.
In this case, we don’t have to minus the dividend income from the ‘share of profit of associate’ since the dividends would not have been in the Associate’s statement of profit or loss. The adjustment to remove the dividend would be made in the investment income. Am i right sir ?
Likewise, for the exact same situation, if we are asked for the ‘Investment in associate ‘ in the consolidated Statement of financial position.. We need to minus the A% of dividend income from the ‘investment in associate ‘ .
Am i right sir ?
Your treatment (or, more accurately, your non-treatment) of the dividend in the associate’s results is correct
The investment in the associate is measured as “Cost of investment + investor’s share of the associate’s post-acquisition RETAINED profits – any impairment in the value of that investment”
I don’t know how you got that dividend from the associate into “Investment in associate” in the first place – it has no place there
You could try this way:
Cost of investment
time apportion to arrive at post acquisition
deduct the dividend to arrive at post acquisition retained
and apply the percentage holding
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