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I have gone through the lectures on consolidation. Can you please tell me the accounting treatment for proposed dividend by subsidiary and associates firstly in separate financial statements and in consolidated income statement and consolidated balance sheet.
If the proposed dividend was declared AFTER the year end, the treatment is to disclose it as a non-adjusting subsequent event.
If before the year end, the treatment in the individual financial statements is to show it as an appropriation in the Statement of Comprehensive Income ( not in the Statement of Income ) and also in the Statement of Changes in Equity.
The parent, in their own statements, will show the amounts receivable from the subsidiary and the associate.
In the consolidation, dividends from subsidiary and associate are ignored in the group Statement of Income and in the group Statement of Financial Position.
In the group Statement of Changes in Equity you will find the parent’s own dividend and the dividend payable by the subsidiary to the non-controlling interest.
OK?
And if dividends are paid out to parent- included in retained earnings in gsofp and ignored in p& l??
Correct – in the W3 calculation of Consolidated Retained Earnings, the dividends (both payable and receivable) should be reflected in the working. But dividends paid / payable by the subsidiary to the parent are NOT shown as income in the Statement of Consolidated Income.
Dividends payable by the parent are shown as an appropriation in the Statement of Changes in Equity and the subsidiary dividend payable to the nci only is shown as an appropriation in the nci column of the Statement of Changes in Equity
Hope that helps
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