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Stephen Widberg.
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rashard
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Hi Stephen,
Why is dividend paid by a subsidiary to the parent deducted from the net assets of subsidiary at disposal in order to calculate profit or loss on disposal? (it is done so in Kaplan.. Q#4 from chapter Changes in group structure) Only the NCI dividend should be deducted right?
Kindly clarify this..
Thanks
Stephen Widberg
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If a dividend has been paid the the whole amount of the dividend would have reduced the net assets of the subsidiary.
Mercifully the examiner doesn’t seem to worry about dividends (except in cash flow questions).
rashard
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Okay sir.. Thank you.. I understand why it’s deducted. BTW, what if a subsidiary has been disposed while there is an intra company payable balance to the parent? As these are eliminated in consolidation, do we need to add back on disposal date? (Because after disposal, the entities are no longer in the group)
Stephen Widberg
- Topics: 10
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No – inter-company balance adjustments have no impact on the subsidiary accounts.
rashard
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