intra group dividend

You need to got back to chapter 8 in the F7 course notes!

The dividend entries go through the retained earnings calculations – so subsidiary paid dividends are deducted in arriving at subsidiary retained earnings and the parent’s retained earnings will be increased by their share of the subsidiary dividend.

When preparing the consolidated statement of income, the investment income received by the parent from the subsidiary is ignored (ie not included within the statement of income)

Does that clear it up for you?

No, the dividend from the subsidiary WILL go through the parent’s profit or loss account as investment income.

When preparing working W3 Consolidated Retained Earnings, the parent’s own retained earnings figure will have been increased by the parent’s share of any dividend received from the subsidiary (or will be increased by the parent’s share of any dividend proposed by the subsidiary but not yet paid)

At the same time, the subsidiary’s retained earnings figure will have been decreased (or will be decreased) by the full amount of the dividend that has already been paid or that still remains to be paid.

The working W3 mantra says it all!

“H’s own (per the unpublished H balance sheet)

+

H’s share of S post-acq RETAINED (ie after taking out the full dividend)

–

Goodwill impaired since acquisition (just our share)”

“What if there’s a mid disposal or acquisition and the dividend is paid during the year, should we take the percentage of holding at the end of the year of beginning of the year?”

Neither! You take the share-holding as at the date the dividend was paid!