As-23
Querist : Anonymous
Pls help me out by giving the solution with explanation.
As per para 12 of AS 13, if any pre acquisition Dividend is received by the Company, then such dividend shall be reduced from the cost of the investment. Assuming the dividend declared is for all shareholders, then dividend attributable to Grand is Rs. 50,000*30% = Rs. 15,000.
Carrying amount of investment = Rs. 200,000 - Rs. 15,000 = Rs. 185,000.
The dividend declared for 2009-10 will be treated as income in the hands of Grand and is not taxable in Income tax (both under normal profit and 115JB case).
In Consol Financial Statements also, the carrying amount will be the same.
The treatment as per AS 23 will be as follows-
Dividend paid for the year 2008-09- Rs 50000, Dividend earned by Grand Softex- 30% of Rs. 50000 i.e Rs. 15000
Out of Rs. 15000 earned by grand, 2 months(upto 31/05/2009) dividend of Rs. 2500 will be for pre acquisition and be reduced from cost.
Hence, cost as on 31/03/2009 will be Rs.200000 - Rs 2500 = Rs.197500
Remaining amount Rs. 12500 will go t P&L for 2008-09
entire Dividind for 2009-10 will be credited to P&L A/c.
Querist : Anonymous
If the answer is different, please provide the total details of the problem.
Querist : Anonymous
this is the complete details of the problem
If are applying equity method as per AS-23 then carrying amount will be as under-
There is no relevance of dividend distributed for F.Y. 2008-09, since the shares are acquired after F.Y. 2008-09 i.e as on 01/06/2009.
Further, Earning of Rs. 15000(30% of Rs. 300000 for 2 months)which is related to the period from 01/04/2009 to 31/05/2009 will have any impact on carrying amount.
The earning earned after 01/06/2009 will be added to the carrying amount.
i.e carrying amount will be-
Rs. 200000+75000(30% of Rs.300000/12*10)=275000.
Querist : Anonymous
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