The article will explain how to calculate cash flows and where those cash flows are presented in the statement of cash flows. It is relevant to the FA (Financial Accounting) and FR (Financial Reporting) exams. This article considers the statement of cash flows of which it assumes no prior knowledge. An introduction to professional insights.Virtual classroom support for learning partners.Becoming an ACCA Approved Learning Partner.Using your MyKaplan ‘contact a tutor’ option, you can email, live chat or request a call back from an expert tutor and they’ll be happy to help you try and get those marks needed to pass. If you are enrolled on a Kaplan course and are studying towards your exam, you can contact a tutor via your MyKaplan for support. Increase the b/f figure with the profit that the parent would be entitled to in the year and then the missing figure will be the dividends that have been paid (and received by the parent). Therefore, we use the value of the Associate in the CSFP at the start and end of the year. When we have a cash flow question, we are generally given the CSFPs and a CSPL and we are not told the amount of the dividend that has been received from the associate in the year as they want us to calculate it. Note: If however we were only given the profit that the associate had earned since the date of acquisition then we would add the parent's share of this figure to the cost of the investment and then deduct any dividends that had been received on account of these profits in the year. On consolidation when calculating the value of the "investment in associate" on the CSFP we take the cost of the investment plus the parent's share of the movement in net assets since the date of acquisition.Īs net assets include your retained earnings the payment of any dividend would already have been deducted from this and s o no adjustment is needed. The dividend received from the associate is eliminated from the parent's investment income as, if it isn't, then it is effectively being double counted when you recognise the share of associate profit in the CSPL. In their individual financial statements. With dividends, these are accounted for as being a deduction from retained earnings when they are paid and so the associate would The treatment of dividends (associate and parent) in consolidation To work out the dividend we need to follow the below working: These will form part of their own line in the Cash flows from financing activities. When we are looking at a group statement of cash flows, any dividend paid by the subsidiary to the NCI should be disclosed separately. This means that when we include our share of the post-acquisition movement in net assets, this dividend has been eliminated. In other words, the below journal has been posted in the subsidiary's individual account. The reason it doesn't matter either way is: the totals from P's column and the adjustments column in the Working 2 do not feed through to other workings or the Financial Statements (only S's total does) so you get the same final answer either way.Ĭonsolidated Statement of financial positionįor group retained earnings this is already dealt with as the RE figure from the subsidiary will have already taken the dividend figure out. Please note: The ICAEW do sometimes put this in the adjustments column instead, and either is fine. Kaplan advises that this adjustment should be in the Parent's column, as per the pro forma in your Kaplan Summary Notes. This is the parent’s % of the total dividend paid by the subsidiary. There will be an investment income amount in the Parent’s column which needs to be eliminated. Any payments made between subsidiaries and parents are classed as intra-group transactions, therefore they need to be removed.Ĭonsolidated Statement of Profit and Loss. Subsidiaries pay dividends to their owners ( Parent and NCI). If you’re looking to sit your ACA FAR, ACCA FR, ACCA SBR exam, or even potentially the CIMA F1, CIMA F2, AAT AQ16 FSLC or AAT Q22 DAIF papers, you might be concerned about the consolidation question. This cheat sheet will help you understand the adjustments that you need to make. We know we are going to get a consolidation question in the exam and more likely than not we will have to deal with a dividend.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |