合并报表会计.ppt

* Dividends from pre-acquisition equity Dividends paid by a subsidiary out of pre-acquisition profits i.e. from the balance of retained earnings existing at the acquisition date are not treated as revenue by the parent company but as a reduction of the carrying amount of “Shares in S Ltd”. NB. P Ltd will never pay a dividend to S Ltd. Why? * Dividends from pre-acquisition equity Before doing the substitution elimination entry we need to determine if “Shares in S” has been written down by the amount of a pre-acquisition dividend paid by S to P. Compare the carrying amount of “Shares in S” with the purchase price paid by P. If “Shares in S” has been written down we must reverse this write-down and bring “Shares in S” back to the original cost. * Dividends from pre-acquisition equity In the books of S the net effect of declaring and paying a dividend from pre-acquisition profits is: Dr Retained earnings xxx Cr Bank xxx In the books of P the net effect of receiving this dividend is: Dr Bank xxx Cr Shares in S xxx * Dividends from pre-acquisition equity Why doesn’t P credit a revenue account with the amount of the dividend? Because P will treat the dividend as a partial return of the purchase price it paid for its asset “Shares in S”. To reverse the effect of this transaction: Dr Shares in S xxx Cr Retained profits (opening) xxx (if dividend was paid in a previous period) * Dividends from pre-acquisition equity If the dividend was declared and paid in the current period: Dr Shares In S xxx Cr Interim dividend paid* xxx * a negative appropriation account * Dividends from pre-acquisition equity P owns 100% of S. On 1 June, S declares a final dividend of $30 which will be paid in August. This is recorded: In S Ltd’s records: Dr Final dividend provided 30 Cr Dividend payable 30 In P Ltd’s records: Dr Dividend receivable 30 Cr Shares in S Ltd 30 * Dividends from pre-acquisition equity To reverse t