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Hello,
My question is in relation to example 6 of chapter 10 in the F7 Lecture notes.
While I can understand the proportion that you have to make for the answers in this question i.e. 7/12ths of the months are post acquisition and 5/12ths are preacquisition. I am struggling with the fact the question states that Lasma has not accounted for dividends receivable from Goda which were proposed before the year end? Would this not affect the calculations and need to be brought in within the parent company?
The question is as follows so you dont have t o go searching:
Lasma aquired 90% of issued share cap of GODA on 31st Jan 2009. The Statements of CI for the two for year ended 31 August 2009 were.
LASMA GODA
Revenue 15600 2900
COS 8400 1300
PBIT 7200 1600
INCOME TAX EXPE 2000 420
Prof after tax 5200 1180Dividends of $1700 and $200 respectively have been proporsed. Retained earnings b/f $6500 and $2020 respectively. Lasma has not accounted for dividends receivable from Goda which were proposed before the year end.
My query is with this last bit as in the lectures you state (I believe it is the one for example 3 around 7 minutes) that if it has not been accounted for bring it in.
Thanks for your help,
Joe
A dividend from a subsidiary is within the group and thus needs to be ignored when preparing the consolidated statement of profit or loss
So, yes, we need to bring it in for the proof (very, very rarely asked for) and technically we need to bring it in in order that we can then ignore it
Does that answer your query?
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