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Divident Received from subsidiary clarification

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Divident Received from subsidiary clarification

  • This topic has 3 replies, 2 voices, and was last updated 1 week ago by P2-D2.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • February 22, 2021 at 10:12 am #611294
    StefanosG
    • Topics: 19
    • Replies: 12
    • ☆

    Dear Tutor,

    So let’s say that we have a parent named Tigre that owns a 80 percent of Zebra. Zebra at 31 of December declared a dividend of 10.000. Year end is December.

    Could you please help me how would i treat this in the consolidated SPL SFP and the consolidated group retained earnings?

    Tigre retained earnings is 20.000
    Zebra retained eranings is 3.000

    My solution is eliminate the 10.000*80 =8000 from the subsidiary in the spl.

    Group retained earnings.
    Tigre. 20000
    3000*80%. 2400
    Less divident. 8000

    Total. 14.400

    Thank you!

    February 22, 2021 at 9:17 pm #611373
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 5046
    • ☆☆☆☆☆

    Hi,

    The dividend received from the subsidiary is eliminated on consolidation of the group SPL, so your understanding is correct.

    You do not need to make any adjustment in the group SFP.

    Thanks

    February 23, 2021 at 2:57 pm #611445
    StefanosG
    • Topics: 19
    • Replies: 12
    • ☆

    Hello,

    So the income from the divident is not adjusted in the retained earnings column of the parent as received nor deducted from the subsidiary ?

    Thank you.

    February 24, 2021 at 8:23 pm #611577
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 5046
    • ☆☆☆☆☆

    Hi,

    No, the accounts of the subsidiary need to be correct first, prior to any adjustments. The dividend income is therefore included within the parent’s retained earnings.

    Thanks

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