FNST practice CBT

davejvh

from the AAT FNST practice cbt [here]:
http://www.aat-interactive.org.uk/elearning/new/FNST_practice110111/index.html

exert from 2nd task, question 1.5
Claw PLC acquired 90% of the issued share capital and voting rights of deer ltd on 1st april 20x0
from statements of comprehensive income other income: claw plc £1,800, deer ltd £0
from data: other income of claw plc included a dividend received from deer ltd. Deer ltd had paid a dividend of £1,710 on 17th March 20x1



so my working for other income in the consolidated statement:

claw owns 90% of deer so 90% of 1710 is £1539 claw’s dividend rec’d.
so other income for consolidated statement should be £261? (1710-1539)



am I wrong?

AmyRichardson

I was always told to take out dividends - because you cant pay dividends to yourself!

so no need for the working??????

Not sure though so dont take my word for it

keane155

I'd say leave the dividends out too.

davejvh

@keane @amy thanks for replying

thing is, it says "included in the other income is the dividend", implying the "other income" doesn't just consist of the dividend, right? especially as the dividend paid is £1710 and the other income is £1800.

so surely some "other income" from the parent should be included? Is it me or does it not make sense to eliminate the whole £1800?

also, the parent company cannot have received the whole £1710 dividend, 10% of it went to the other shareholders....

that's why I did the above working. If you were to take out the whole £1800, why would the question disclose the dividend paid and the % the parent owns? without that data you would assume the £1800 was all dividend. Or if the total dividend paid by the subsidiary company was £2,000, 90% of it would have been £1800 which went to the parent company and that would make sense to me.

Am I just thinking backwards?