- This topic has 2 replies, 2 voices, and was last updated 8 years ago by
.
Viewing 3 posts - 1 through 3 (of 3 total)
- Posts
Hello Tutor, Please I do not understand why we need to deduct the share of associate’s profit since the associate is not a sub and part of the group. Also, why do we need to take out the gain on disposal of a subsidiary since the sub is now disposed and, no longer part of the group. Kindly explain. Thank you.
Hi,
Both of these are non-cash items that need to be removed.
The associate’s profit has been added in to the group profit but it hasn’t increased the cash of the group, hence we deduct it to get back to a cash figure.
Similarly the gain on disposal is increasing profits but not increasing cash, so once again we remove it from group profits.
Thanks
Viewing 3 posts - 1 through 3 (of 3 total)
- You must be logged in to reply to this topic.