Are adjustments for post acquisition dividends different from those for pre acquisition dividends explain?

There is no difference in the accounting for pre-acquisition or post-acquisition dividends. They areall accounted for as post-acquisition dividends. The adjustment is to dividend revenue recorded bythe parent and dividends paid recorded by the subsidiary.

How do you treat pre-acquisition dividend received by holding company?

Dividend received from the subsidiary company out of pre-acquisition profits. Thus the holding company deducts the amount of dividend received out of pre-acquisition profits from the balance of shares in subsidiary company account.

Why is it necessary to make adjustments for intragroup transactions?

It is necessary to make adjustments for intra-group transactions because it would otherwise lead to double-counting the effect of a transaction.

What is meant by Realisation of intragroup profits or losses?

What is meant by ‘realisation of intragroup profits and losses’? – profits/losses are realised when an entity transacts with another external entity. – consolidated statement of profit and loss will only show realised profits and realised losses. – intragroup sales of inventories are realisable when they are on-sold.

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Why are intragroup transactions adjusted for on the consolidation worksheet?

The consolidated financial statements are the statements of the group, an economic entity consisting of a parent and its subsidiaries. … Adjustments must then be made for intragroup transactions as these are internal to the economic entity, and do not reflect the effects of of transactions with external parties.

How do you treat pre-acquisition profit and loss?

Pre-acquisition profit is the profit earned by the company before it is being acquired. It is treated as capital profit and not revenue profit and is not available for distribution of dividend.

Why pre-acquisition dividend is reduced from cost?

When the company invest in shares of the other company, the dividend pertaining to the year in which company does not accquire/invest in share of the company is reduced from the cost as the cost is cum dividend(cost is including the sum of dividend) so in order to make it EX- Divident pre divident is always deducted …

Why is it important to identify transactions as current or prior period transactions?

2. Why is it important to identify intragroup transactions as current or previous period transactions? … If the transactions are not correctly placed into a time context, then the adjustments posted in the consolidation worksheet to eliminate the effects of the intragroup transactions may be inappropriate.

Where an intragroup transaction involves a depreciable asset?

If a profit is made on an intragroup sale of a depreciable asset, then the cost of the asset to thegroup is less than the cost recorded by the acquirer of the asset. Hence an adjustment is necessaryto reduce the depreciation expense and accumulated depreciation in relation to the asset.

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Why is it necessary to make adjustments to revenue accounts at the end of the accounting period?

Why is it necessary to make adjustments to revenue accounts at the end of the period? Payments received in advance and originally recorded as a liability should be reduced for any portion earned during the current period.

What is Realisation profit?

Simply put, realized profits are gains that have been converted into cash. In other words, for you to realize profits from an investment you’ve made, you must receive cash and not simply witness the market price of your asset increase without selling.

Why are tax effect entries sometimes necessary in making consolidation worksheet adjustments?

Some consolidation adjustments result in changing the carrying amounts of assets andliabilities. Where this occurs a temporary difference arises as there is no change to the tax base. Inthese situations, tax-effect entries, require the raising of deferred tax assets and liabilities, arenecessary.

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