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Good morning Mike.
At first, i really appreciate your kind answers before.
I’ve found some inconsistency about the way to deal with investment in Current Asset.
In the text book that i use, there is a question below.
SOFP
Current Asset…………2007……….2006
Investments…………….95……………20SOCI
Investment income…………………….3so the answer is below
Cash flows from investing activities.
Investment income received…………………….3
(there is no purchase of investment!!! i’m 100% sure. )However, in Chapter 19 Opentuition question page 109 Exmaple 6 Revised Statement of Cash flows
SOFP……………………2009…………………2008
Investment………………396…………………125SOCI
NONE about investment.the answer is below
Cash flows from investing activities.
purchase of Investment……………………..(239)I asked this question before, and sir you said to me that if the question tell you investment receivable and then i can apply T-entry to figure out how much they receive from the investment, but if it’s not, you said you could simply write down the investment income received. it means no need to figure out purchase of investments
i think both of the questions are not different except that the one in the text book has the investment income received. In my thought, based on what you thought us, i must make a T entry to get the purchase of investment….
hopefully you get my point… i mean there is no reason why the ways to get the answers in two different questions are different cuz they are the same species. i think they must make a T entry to get the purchase of investment, but the first one doesn’t have this process. the second one has the process.
i really hate these kinds of inconsistencies…..
Subsequent to this,
in Chapter 19 Opentuition Exmaple 5 and 6(comprehensive exmaple),
the way to get the dividend payments are different,
could you teach me why you apply different ways to get them?
what is the difference between them….?
in the exmaple 5,
your working is a bit different to the method i know.Dividend payable T entry
c/f.915………….b/f.831
cash.1431…….Final(SOCI) 915
……………………Interim(SOCI) 600
2346……………..2346this is completely different to the normal way.
could you explain why this is different to the way to get the dividend payment in Exmaple 6th?
these two questions are the thing I want to know.
thank you for your answer.
“i really hate these kinds of inconsistencies…..”
There’s no inconsistency!
What does note 3 say on page 106?
Movement in the investments, according to the 2 statements of financial position, is $271 ($396 – $125)
But of that movement, note 3 tells you that $32 is in fact a cash equivalent
So the movement in the investments is $239 ($271 – $32)
In example 6 there is a liability brought forward of $140 and a liability carried forward of $81
Additionally there is an appropriation from the profit after tax of $81 being this year’s dividend – declared but not yet paid (that’s why it’s still a liability)
There is no indication of any interim dividend having been paid in the notes to the question so the only payment in respect of dividends must be the payment of last year’s liability brought forward ($140)
In example 5 there IS an interim dividend of $600 according to the question
Last year’s liability brought forward is $831 and this amount MUST have been paid as well as the interim dividend of $600
So a total dividend payment during the year of $1,431
What more do you need?
And there is absolutely NO inconsistency within these workings – example 5 has an interim dividend, example 6 doesn’t
OK?
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