Abhinash Pansari (CA final Article) 06 April 2011
How to treat dividend in the consolidated financial statement when holding company acquired shares in subsidiary on different dates.
For eg. H Ltd acquired 8000 shares on 1/4/2009 at Rs 110000 and on 31/7/2009 6000 shares at Rs 86000. The shares purchased on 31.7.2009 are ex-dividend and ex-bonus from existing holder. On 31/7/2009 dividend at 10% was received from S Ltd and was credited to P&L A/c. On 31/7/2009 it received bonus share from S Ltd. in the ratio of 1 share on every 4 shares held. The balance in the P&L A/c of S Ltd. as on 31/3/2010 is Rs 60000 and net profit during the year is Rs 24000. The balance in the P&L A/c as on 31/3/2010 is after the issue of bonus shares made on 31/7/2009.
Share capital of S Ltd. as on 31.03.2010 is Rs 200000 (Rs 10 per share)
Show treatment on Analysis of Profits of S Ltd.
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Rachit (Ca-Final Article.) 06 April 2011
|Treatment in AOP|
|Add:- Div Paid||20,000.00|
|Less div Paid||(20,000.00)|
To the Best of my knowledge thiss treatment should be done
but in case of holding co you will take only rs. 8000 as dividend only and the same shall be in Cost of capital and not in P&L
Abhinash Pansari (CA final Article) 07 April 2011
Firstly, the entire Rs 24000 must not be treated as Revenue profit because H ltd come into holding on 31/7/2009, so out of 24000, Rs 8000 will be treated as capital profit and 16000 as revenue profit.
Secondly, why did you added Rs 20000 and Rs 40000 to the revenue profit and subsequently reduced the same from capital profit.
Rachit (Ca-Final Article.) 07 April 2011
To the best ofg my knowledge i am unable to get why you made the same treatment because i hadnt studied anything like this.......
may be i am wrong............
i did the same as both bonmus and dividend are paid from the curent year proift. bbut the same sholud not be paid from revenue as dividend is related to pre period and bonus untill question mention assume to be paid out of pre profit..........
Ramya Kinthali (Financial Consultant) 04 October 2011
when dividend is paid on 21/7/2009 it is dividend paid for shares as on 31/3/2009 ...
So in the givencase how can the dividend paid be 20000rs as the sares as on 31/3/09 are not 2,00,000rs
If dividend is paid for shares newly issued on 1/4/10 it will be called as Interim dividend .. .
First this prob requires share capital calculationa s on 31/3/09 and number of bonus shares issued .