Treatment of dividend in Consolidated financial statement


Abhinash Pansari (CA final Article)     06 April 2011

Abhinash Pansari
CA final Article 
 4 likes  101 points

| My Other Post

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.

avater

Rachit (Ca-Final Article.)     06 April 2011

Rachit
Ca-Final Article. 
 27 likes  565 points

View Profile | My Other Post

 

  Treatment in AOP  
  Capital  Revenue  Total
Profit   36,000.00  24,000.00  60,000.00
Add:- Div Paid  20,000.00  
Add:-Bonus              -    40,000.00  
    36,000.00  84,000.00  
Less div Paid  (20,000.00)    
Bonus  (40,000.00)    
   (24,000.00)  84,000.00  60,000.00

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

avater

Abhinash Pansari (CA final Article)     06 April 2011

Abhinash Pansari
CA final Article 
 4 likes  101 points

View Profile | My Other Post

thanks Rachit but i dont think this treatment is right 

avater

Rachit (Ca-Final Article.)     07 April 2011

Rachit
Ca-Final Article. 
 27 likes  565 points

View Profile | My Other Post

Mr. Abhinash tell me why you think the ssame if you want i can give you an explaination for my answer

avater

Abhinash Pansari (CA final Article)     07 April 2011

Abhinash Pansari
CA final Article 
 4 likes  101 points

View Profile | My Other Post

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.

avater

Rachit (Ca-Final Article.)     07 April 2011

Rachit
Ca-Final Article. 
 27 likes  565 points

View Profile | My Other Post

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..........

avater

ACCOUNTANT (Student)     25 September 2011

ACCOUNTANT
Student 
 33 likes  400 points

View Profile | My Other Post

The p&l a/c would be

 

                                          Capital              Revenue            Total

 Existing p&l(3/2009)      96000                8000                  104000

Less:div paid                   12000               (8000)                

Less:Bonus issued        40000                                     

For later period                                          16000

Bal                                     44000               16000              60000

                     

avater

Ramya Kinthali (Financial Consultant)     04 October 2011

Ramya Kinthali
Financial Consultant 
 6 likes  106 points

View Profile | My Other Post

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 .

avater

Arati Balakrishnan (Student)     04 December 2015

Arati Balakrishnan
Student 
 25 points

View Profile | My Other Post

How will the treatment be if it is interim dividend?


Leave a reply

Your are not logged in . Please login to post replies

Click here to Login / Register  




Popular Discussion


view more »