[thiran]

But sir,

if we don’t deduct dividend income received from subsidiary from Parent’s RE and add the same figure to subsidiary’s RE in W3, we don’t effectively eliminate the intra group dividends.. Do we? because CSOPL is just a working..So if we eliminate intra group dividend from CSOPL, we also have to adjust RE… Just because we remove it from CSOPL that doesn’t eliminate that figure from RE since our RE figures are based on the result of individual companies. In individual financial statements we already deduct parent’s share of dividend from subsidiary’s RE and this is included in parent’s retained earnings.

[thiran]

Okay lets say during the year Parent has paid no dividend..but its 80% subsidiary has paid $10,000 as dividends and accounted for it correctly..As per the question year end RE balances in the question are;

-Parent 80,000 (dividend income is included since it’s year end RE)
-Subsidiary 60,000 (after the the dividend payment)

Since parent has received a dividend income of 8,000 we will eliminate this from CSOPL..
How will our W3 get affected by this ?

______________Parent_________Subsidiary
As per question 8,0000 _________60,000
Dividend______??????__________??????

[thiran]

If the dividend has already been accounted for and paid.. Dividends are included in our RE right? no need to show it again? watched the dividend example on the site and in that example companies had not accounted for dividends..I think thats why its is included in W3

[thiran]

Sir,
I went through all the all the adjustment related to intra group loans and dividends.. For last time please check the following adjustments and confirm them.

INTRAGROUP LOANS:

*Eliminate both loan receivable and loan payable balance from CSOFP.

*Eliminate both interest income and interest expense on intra group loan from CSOPL.

* Deduct interest income from Parent’s retained earnings and to reverse interest expense-which has already been deducted from subsidiary’s profit- add it back to subsidairy’s RE.. (This will increase the group retained earnings indirectly as above MCQ) (In working 3)

INTRAGROUP DIVIDENDS

* Eliminate any dividends receivable and payable from CSOFP.
*Eliminate dividend income from CSOPL.
*DON’T DO ANY ADJUSMENT TO REATINED EARINGS AND NCI (WORKING 3 AND 4)

If I am wrong, correct me.. If I bother you asking same thing again I’m sorry 🙁

[thiran]

Sir now I got the point… Since we are adjusting subsidiary’s profit it will automatically correct the parent’s share. One more thing sir.. how to deal with intra group dividends ?

[thiran]

But sir, we dont make any adjustment to retained earnings. do we? we just remove interest income and expense from CSOPL..but that’s not enough.. Am I wrong? We must make adjustment to RE and NCI..otherwise above impact doesn’t reflect. does it?

[thiran]

Sir, Could you please post the answer to that question here using the above method?

[thiran]

according to your method, there is no impact on GROUP INVENTORY under any circumstance. Isn’t it?

What you are doing is, you calculate URP and deduct it from associate’s PAT figure. Then you get the group’s share of profit of associate by applying relevant %. Then you add this CSOPL as the share of profit of associate, Group Retained Earnings in workings and Investment in associate figure in CSOFP..

Am I correct?

[thiran]

Is it applicable to any situation where there is remaining PA which can be used to set off against gross dividend income? If yes, then maximum tax credit available on dividend income is 10% * Taxable dividend income (Gross dividend income – Personal allowance if available ) ?

[thiran]

I think you should use Std. Material cost per unit if you calculate material yield variance based on input..
Here it is,
5100kg of materials should have yielded (5100*90/100) = 4590
But did yield = 4000
Variance in units = 590
* Std. Material cost per unit (2/0.9) = 2.22
Variance in $ = $1311

I think we should arrive at unit cost dividing total cost of input by expected output which is 0.9kg in this example. By doing so we absorbed the cost of 0.1kg- which is the normal loss – into production cost. That’s what we did in F2 when we do ‘Process Costing’..

I think this is the reason. Sir please correct me if I’m wrong 🙂

[thiran]

Sir, I cant understand why you used above proportions.. beacause total of those fractions will be (110/100) normally total must be (100/100). In this example to get Std qty * Std mix why dont we use following fractions;

A 50/110
B 40/110
C 60/110

Or cant we assume that there is a normall loss ?

[thiran]

Thank you sir I got it..
I used old current asset balance even after I that journal entry was passed..

[thiran]

Dear Sir,

I was told by my lecturer to adjust such a provision when adjusting for working capital changes. Is it okay? Or is there a standard way in practice to deal with provisions in preparing cash flow statements ?

[thiran]

Dear Sir,

Can’t we re-classify revaluation surplus to the P/L once we determine to classify above PPE as an investment property ?
or
are we still required to keep the reserve further?

[thiran]

Thank you for your reply sir.
In fact, can’t be there any ‘Logical’ reason for everything that’s there in a standard?

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