Should dividends recieved be taken away in operating activities?

topcat

Hi all, Bit confused as Osborne take away dividends recieved in operating activities when doing the reconciliation of profit from operations to net cash from operating activities but kaplan don't seem to do anything at all with it... What would be the correct way? Osborne will then add the dividends recieved back in on the statment of cash flow for the year under the heading investing activities Confusing stuff

kkelly

Hi topcat,
Dividends received are not considered to be an operating activity, so dividents received are a deduction from Profit from Operations and then accounted for as an Investing Activity. Think of it this way, if their are dividends rec'd in the statement of comprehensive income, the profit for the year is higher by the amount of those dividends. Therefore to eliminate them you deduct from profit and then include them in investing activities.
Hope this helps!!

topcat

Brilliant explanation thank you very much for taking time to clear that up appreciated :-)