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hello, so the revision kit gives an Investment income line under Parent 500,000
(v) Parent’s investment income is a dividend received from investment in a 40% owned Associate. The underlying earnings for associate for the year end were 2,000,000
but in answer It shows only 800,000.
It could be 500,000+800,000 , why not??
Source (revision kit 16-17, Page 38, ques 121 (Viagem) )
I thanks a lot.
Because, for the purposes of the consolidated statement of profit or loss, we are interested in the parent’s share of the associate’s profit after tax and that figure is therefore 40% x $2 million
The dividend from the associate is paid OUT OF that pre-dividend profit figure
OK?
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