Free ACCA lectures and course notes ACCA AAT FIA resources and forums ACCA Global Community. The reason for ignoring dividends is really very logical. The paying companies will finance the dividends out of post-tax profits. But for consolidation, we are including our share of those post-tax profits so not to ignore them would result in double counting. Parent Dr Cash Subsidiary: Dr Retained Earnings Cr Dividend Income Cr Cash.

As we Include post acquisition retained profits of subsidiary in consolidated reserves. So we include reserves after dividend. Consolidated SOFP Investment in Associate: Can you please identify where i am getting it wrong.

The consolidated statement of income is merely an exercise in presentation of the consolidated results. We already know the figure for retained earnings for the statement of financial position from working W3. You ask where you are going wrong in your thinking.

Lesson 14

These adjustments are for presentation purposes only. They are not something for the application of double entry principles of debits and credits.

That tells me that I DID say there is cancellation of dividends payable in Receivables against Payables, and that is correct. And there is no such thing as an intra-group balance with an associate!

Once more, the associate is NOT a group company. Investment in Associate This is because the dividends paid by the associate is paid out of the retained earnings which we have already accounted for and increased our investment in associate; hence since the dividend is paid out, it must reduce the value of our investment.

Remember; when we record the share of profit from associate, we normally. Investment in Associate, by that figure of share of profit Cr: Share of profit from associate, by the same figure of profit recorded above. I believe that my entries would achieve the same end result. Hello Mike, When the dividend is received, the parent records it by: The logic behind crediting the investment in associate is that the net assets of the associate decrease when it pays out dividends dividends are paid out from profits.

So the parent debits investment in associate with its share of profit because it increases the net assets, LIKEWISE, It credits investment in associate with its share of dividend because it decreases the net assets.

The result would be that the same income would be included twice. No, because I have already pointed out more than once on this thread! I believe when you think do declared dividends go on the retained earnings statement it you will realise nothing is double counted because in the case of a dividend paid out that it will be paid out from realised earnings of the associate.

In reality dividends are binary options legit signals merely distributions of capital. No real value has been created or destroyed in economic terms. As Mike Little indicates in earlier posts no adjustments are generally made on associates because of the lack of control of the parent company associates lie outside the group.

Therefore,Gaudiano, though I believe that your method would generally work in practical terms in most cases,it could cause problems where the percentage ownership in a subsidiary changes or in similar instances. I came across a question in F7 for consolidation. Why in the consolidated statements of profit or loss, the investment income is nil?

We treat the group of companies as though they were a single entity. If you can accept that, then you can also aftermarket stocks for ruger m77 hawkeye that a dividend paid by a subsidiary and received by a parent is the same as you paying money from your left pocket into your right pocket.

So the profits out of which the dividend is funded are how to earn money on youtube yahoo answers. This 2m has been credited to OCI.

If those dividends have not been recorded, then they need to be. Does it mention the individual record of the parent? OpenTuition is an award winning website, providing all accountancy do declared dividends go on the retained earnings statement throughout the world with the selby cattle market shop they need to study for the major … Learn more.

Viewing 25 posts - 1 through 25 of 49 total. May 5, at 1: May 5, at 9: But for consolidation, we are including our share of those post-tax profits so not to ignore them would result in double counting Is that clear?

May 6, at 9: Do you meanwe need to ignore dividends from subsidiary and associate? Dr 60 second req gso binary options system uk Earnings Cr Dividend Income Cr Cash Consolidated Accounts: Consoildation adjustment should be what. May 7, at 4: We already know the figure for retained earnings for the statement of financial position from working W3 You ask where you are going wrong in your thinking.

What Happens to Retained Earnings When a Dividend Is Paid? | irudivupic.web.fc2.com

They are cosmetic adjustments, not adjustments for recording within accounting records Is that any better? May 8, at Really appreciate the help. May 8, at 5: May 8, at 8: It seems like we can leave the thread with this. May 9, at May 15, at 2: May 15, at 4: May 16, at 8: May 16, at How can you have reached that interpretation from what I have posted?

May 16, at 2: May 16, at 3: September 4, at 2: From my own experience, when we receive a dividend from our associate company we normally Dr: Remember; when we record the share of profit from associate, we normally Dr: September 4, at 7: September 16, at Investment in Associate The logic behind crediting the investment in associate is that the net assets of the associate decrease when it pays out dividends dividends are paid out from profits.

Hope this sounds more accurate; right? September 16, at 2: September 16, at 8: September 17, at 5: March 9, at 3: Hi Mister, I came across a question in F7 for consolidation. March 9, at 4: Because, when we consolidate, we ignore any intra-group dividends paid and received. June 5, at June 5, at 2: If those dividends have not been recorded, then they need to be Ok?

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