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Hello,
I have a question about the treatment of tax on dividends when eliminating dividends from subsidiary:
P receives $850 net of tax as dividends from its 100% subsidiary S. The tax rate on dividends is 15% (i.e. $1000 dividends before tax).
How should I show tax on dividends from S in P’s consolidated financial statements? And in effective tax rate reconciliation disclosures?I would be grateful if someone could provide links on rules/guidances regarding this topic.
Thanks.you should not show any dividend received from subsidiary in consolidated financial statements. therefore deduct $850 from investment income, if that happens to be 0 , then no need to disclose it. if not zero, means it receives income from some other investments should be shown in consolidated financial statements.
Thanks, I know that there should be no intragroup dividends in consolidated financial statements. I was interested in tax on dividends, that is usually withheld and paid to government authorities in my country.
without knowing the laws in your country, is it not likely that the receiving company can set off the tax they have “suffered” by way of with-holding tax?
If you’re asking your question from an F7 perspective, you’re way over the top of what you need to know!
without knowing the laws in your country, is it not likely that the receiving company can set off the tax they have “suffered” by way of with-holding tax?
Unfortunatelly, I didn’t quite understand what you meant there.
If you’re asking your question from an F7 perspective, you’re way over the top of what you need to know!
Well, F7 deals with simple groups, so I aked the question from the point of view of a simple group. However, as you correctly noticed, I am interested to get an answer for a ‘real’ situation, that is not covered in F7 study texts, i.e. when dividend income in parent’s books does not correspond to dividends in subsidiary’s books due to tax on dividends.
I would be grateful if you could provide a brief example of consolidation with dividends and taxes according to your country law.Hi
I’m sorry, but I’m not prepared to go down that road! My knowledge of tax puts me firmly into the category of “a little knowledge is a dangerous thing”!
Maybe you would have more luck if you posted your question on the F6 page
Sorry, again
hi, do we have to use the total comprehensive income to calculate the Non controlling interest.
second question is the change in euity reserve ( financial investment) used to calculate net assets of subsidiary.
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