1). Before consolidation for a parent company do we include only the investment at cost in SOP over the years and in SOPL is it only the dividend received?
2). Whereas if a company invests in an associate we use the equity method only if we consolidate as I understood with the lecture. But if we don't consolidate, how would you account it on SOPL and SOFP over the years?
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Financial statements before consolidation
6y ago#11. Yes
2. As in the answer to 1 :-)
Oh okay thank you. I want to clear one more thing on the power of having to make decisions regardless of having more than 50% on a subsidiary. I want to know what would be the benefits like will they be able to get Higher share of profit regardless of the percentage of shares they have and any other benefit.
6y ago#3No - the dividend per share is the same for all shareholders. So if (for example) they own 60% of the shares they will get 60% if the total dividend. However because they control the subsidiary, they can decide how much of the profits are paid out as dividend.
oh got it. Thank you
6y ago#5You are welcome :-)
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