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Hello Mike!
Please help me understand dividend payment treatment in consolidated SoFP.
June’12 question states that
Robby (parent) has treated the investment in Hail (80% sub) at fair value through other comprehensive income (OCI). A dividend received from Hail on 1 January 20X3 of $2 million has similarly been credited to OCI of a parent company.Answer provided shows reclassification of 2 mils from OCI to RE, i.e. Debit OCI Credit RE – and that is it.
I understand that BUT I dont understand where is other div-related adjustment (like Debit NCI Credit payable 0.4 mils). My question is – why we are not doing this adjustment in this question.Thanks in advance.
Why $400,000? for the nci
Whilst you answer this, I’ll be looking at the question
I presume that the nci has received their share of the dividend by way of direct payment. This is not a proposed dividend that has been incorrectly accounted for- it’s a paid dividend and we have accounted for our share of that dividend inappropriately
I’m still hoping you’ll tell me where the 0.4 mils comes from
0.4 mils is NCI share of 2mils total dividend (20% of non-controlling interest).
My understanding is that in case of dividends paid we need to account them only in NCI’s share, thats why we need to decrease NCI and increase dividend payable in that amount.
Other portion of dividend ($1.6 mils) is intercompany and therefore need not to be shown in cons SoFP.
If we have received a dividend of 2million, and we own 80%, then the nci (1/4 of our holding) should be getting 500,000. That’s why I asked you! It was a gentle way of suggesting that you were wrong!
You keep referring to a dividend payable yet you also mention “a dividend received from Hail”
You can’t have it both ways!
The dividend already paid to the nci will be reflected within the statement of changes in equity. The 2 million will not appear in the consolidated statements
Does that explain it? If not, post again
Mike,
thanks I understand my main question- that scenario says dividends have been paid already and NCI have been adjusted and therefore I dont need to post these adjustments again.
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