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Hi John.
Just a quick question. What is the reasoning behind not listing dividends from an associate under the investing income on a consolidated p&l? I understand the group share of profit after tax is listed (is this before or after dividends are paid?), but if the company receives a dividend surely this is real income and a separate figure from the representative consolidated share shown on the consolidated profit figure?
Because we would be bringing in the companies share of the associates profit for the year, then we don’t want to bring in the dividend as well (the dividend was part of the years profits) – it would be effectively recording it twice.
However the examiner has said that no arithmetic questions will be asked on associates anyway.
Thanks John. I understand now.
I think I was confusing profits (pre-dividends paid) with retained earnings (post dividend paid).
Thanks again, your kind help is appreciated.
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