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Hi there quick question on this topic, bit confused.
When working out the investment in associate calc, if they pay a dividend to the parent, should i deduct the whole amount of div payment or the parents % of significant influence div paymnt. EG if div payment was 100k, should i deduct the whole 100k or say 30k (30% sign inf).
Am i right in thinking this figure is not included in the profit of associate calc? only in investment of associate calc? so if i was doing a CSPL – i would just work out % of associates profits(time apportioned) , and not worry about the div paymnet, however if i was doing a CSFP – and i was calc the Investment in ASS calc, i would deduct div payments?
I hope this makes sense and thank you very much in advance for great lectures and notes and superb feedback as always.
Martin
Hi Martin,
A payment of a dividend by an associate is distribution of its net assets, so we would therefore reduce the value of the investment in associate by our share of the dividend paid out.
With regards to the CSPL then you do not need to adjust for the payment as the dividend is deducted in the SOCIE and not in the CSPL. The only adjustment to be made in relation to the dividend in the CSPL would to remove the dividend income received by the parent in its investment income. This is then replaced with the share of profit of associate under equity accounting.
Thanks
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