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Please please tell me treatment of dividend from subsidiary in sofp..
Do we deduct from net asset of sub ? Do we add that amount in RE ?In soci ?
Do we deduct from sub profit ? Do we add in parents income ?In cash flow ?
Thanks a bunch.. 🙂
In consolidation you do the entry:
Dr other comprehensive income X
Cr R/E. XSo thats mean the working 2 of net asset of subs.. The reporting date net asset will decrease right ?
Not sure. I guess no.
See Q1 in June 2012 exam. The parent receives dividends from a sub. The above entry is done in consolidation. Net assets of subs didn’t change for this amount, the presented balance as of reporting date of a sub already contains the entry:
Dr R/E (div paid)
Cr cashPlease, someone correct me if I am wrong.
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If the dividend is payable by the subsidiary and the entry is made, the correction should be: Eliminate the The dividend payable up to H% and dividend receivable of parent book.
If the dividend isn’t made, the correction will be:
Dr. Dividend Receivable (Parent)
Cr. Retained Earnings (Parent)And in SOFP, the dividend receivable and payable (Up to H%) should be eliminated.
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holding %
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