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- This topic has 2 replies, 2 voices, and was last updated 2 years ago by alawi sayed.
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- June 2, 2022 at 7:29 pm #657166
Hello Sir,
Can you see how the dividends was treated in this example
my solution is
cost of associate 1m
Profit 4m x 30% 1.2m
impairment of goodwill ( .7m)
dividends received (.3m)
associate value 10.2mbut in the solution for the question they have a different way
Can you please tell which one is the correct,
Thanks
Q
257 On 1 February 20X3 Pinot Co acquired 30% of the equity shares of Noir Co, its only associate, for $10 million in
cash. The profit for the year of Noir Co for the year to 30 September 20X3 was $6 million. Profits accrued evenly
throughout the year. Noir Co made a dividend payment of $1 million on 1 September 20X3. At
30 September 20X3 Pinot Co decided that an impairment loss of $700,000 should be recognised on its
investment in Noir Co.
What amount will be shown as ‘investment in associate’ in the statement of financial position of Pinot Co as
at 30 September 20X3?Answer
257
$10,200,000
(000)Cost of investment 10,000
Share of post-acquisition profit (6,000 × 8/12) – 1,000) × 30% 900
Impairment (700)
10,200June 4, 2022 at 9:33 am #657336Hi,
The answers are the same and calculated in the same fashion, just with the working laid out slightly differently in each.
Thanks
June 4, 2022 at 8:59 pm #657387Thanks a lot Sir for help.
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