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Hi Sir Chris!
Just want to ask about the working for the investment in associate: share of profit from associate would be on the b/f side and dividend received would be on the c/f side. Why is this the case and not the other way around?
What do you have to consider if something has to be on the b/f or c/f side?
Thanks!
Hi Kyler,
The investment in associate is an asset and so any increase in the value of the investment from the share of profit of associate will need to be debited to the investment, thus increasing the investment.
The dividend received is recording the receipt of part of the associate’s assets (cash) and so is reducing the value of the investment, having received the cash dividend, and so crediting the investment.
Thanks
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