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Continuing my previous post.
I understand that’s how investment in associate is calculated.
Question) The caddy group acquired 240 000 of August’s 800 000 equity shares for $6 per share on 1April 20×4. August profit after tax for the year ended 30 september 20×4 was $400 000 and it paid an equity dividend on 20 September 20×4 of $150 000.
On the assumption that august is an associate of Caddy, what would be the carrying amount of the investment in August in the consolidated statement of financial position(SOFP) of Caddy as at 30 September 20×4?
For this, we got to minus the dividend income from the amount of investment in August , since its in the SOFP right ?
Therefore,
1940 + 60 – (150×30%) = 1455In conlusion , when we are dealing with the Statement of profit or loss figure for associates , we dont have to minus the dividend income off. But when we are dealing with the SOFP figure for associates, we have to minus the dividend income off.
Am i right sir ?
That’s correct – for the statement of profit or loss we take the group’s share of the associate’s this year’s time apportioned adjusted profit after tax
For the statement of financial position we are looking at cost of acquisition + share of post-acquisition retained earnings less any impairment
So, yes, $1,455 is the correct option
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