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Dividends received after year end

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Dividends received after year end

  • This topic has 2 replies, 2 voices, and was last updated 2 months ago by alawi sayed.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • May 15, 2022 at 2:02 pm #655693
    alawi sayed
    • Topics: 138
    • Replies: 149
    • ☆☆☆

    Hello Mr Chris,

    In the following question the divindends were declared during the year but were received early after the year end so why we have to deduct it from associate value even though the dividends were only declared during the year
    but not received .

    Thanks,

    Q

    Alpha Co acquired 20% of Beta Co’s 500,000 ordinary shares for $4 per share
    on 1 July 20X6.
    Beta Co’s profit after tax for the year ended 31 December 20X6 and 31 December
    20X7 was $100,000 and $250,000 respectively. Beta Co also declared a dividend of
    $20,000 for ordinary shareholders on 15 December 20X7. The cheque for dividend
    was actually received and deposited by Alpha Co on 15 January 20X8.
    Assuming that Beta Co is an associate of Alpha Co, calculate the amount to be
    included in the consolidated financial statements as at 31 December 20X7.
    A) $456,000
    B) $466,000
    C) $460,000
    D) $464,000

    Answer is A

    May 16, 2022 at 8:06 pm #655833
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6158
    • ☆☆☆☆☆

    Hi,

    Dividends are recorded on a declared basis as that is when the obligation to pay arises. The question therefore correctly deducts the dividend in the current year as that is when it is paid.

    Thanks

    May 17, 2022 at 9:09 am #655866
    alawi sayed
    • Topics: 138
    • Replies: 149
    • ☆☆☆

    Thank you very much.

  • Author
    Posts
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