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Hello tutor,
This question harassed me quite a long time since CAT study, and finally remember it.
In case where parent received dividend from subsidiary, and question show it in the P/L, we know that it should not show in the consolidated P/L.
However when turn into consolidated SOFP, the figure of retained earning included the dividend received, I has saw many related question it it indeed included.
However I has no suitable example in hand, but more related is in the question of ROBBY JUN 2012, where it adjust the wrong treatment of dividend, and the eventual conclusion is that dividend received from subsidiary should included in retained earning.How it can be since in a group, and why not eliminated? If it can recognised but why P/L excluded?
Thank.
Hi
Has the dividend left the group? Is it paid out to non-group recipients? Or is it simply that funds are being moved WITHIN the group by way of a dividend.
And that’s why it’s in Retained Earnings – it’s being retained in the parent company after the distribution by the subsidiary.
As for the P&L implication, is it an income? From ( effectively ) ourselves? How can you show as an income and an appropriation an amount paid out of one pocket into the other pocket in the same pair of trousers?
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