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You closed replied to my questions so I am here to get clarifications because this can get me stock from going forward.pls, could just tell me where one of the 9s came from. I know that of the group share of 90% is from the post acquisition retained earnings. The 9 of the receivables dividend proposed is it from also the 10,000 and if it is, what was the working?
There’s only two figures of $10,000 in the question and the one apparently causing you problems is for the dividend proposed by Kristina (ok, there’s a $10,000 current liability (payables) also in Kristina but that should not pose any problems)
When Kristina accounts for this proposed dividend of $10,000, ask yourself “Who is going to receive this money?” and the answer is that $9,000 will be paid to Laimonas (because Laimonas owns 90% of the Kristina shares) whilst the remaining $1,000 will be paid to the NCI
Now, at the same time that Kristina is accounting for this $10,000 dividend of hers (Dr retained earnings, Cr current liabilities / payables) Laimonas is recording the receivability of the return on his investment (Dr receivables $9,000 (90% x $10,000) Cr retained earnings
But now we have a receivable of $9,000 which is 90% of a payable of $10,000 and when we consolidate we must cancel that $9,000 dividend receivable against $9,000 of the $10,000 payable
Is that any better?
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