Thanks a lot for explanation, but I have question. If.. Corp A has 25% ownership over Corp B Corp B Net income is $ 100,000 And BoD decided $ 20,000 as Retained Earning and $ 80,000 distributed as Dividend. Will Income Recognition still count as 25% * $100,000 or 25% * $80,000? And what about Dividend declared? does it automatically count as 25% * $80,000?
Hi Generson, So you would record income of $100,000 and then you'd record the dividend at $80,000 in your example, so Dr. Investment in Company for $25,000 and Cr. Equity in Company and you would also do Dr. Dividends Receivable for $20,000 and Cr. Investment in Company for $20,000. At the end of the day your investment increases by $5,000 ($20,000 of Retained Earnings x 25%). We report all income regardless if we receive it or not. Does that make sense?
Nice how can I record a loss in this case On 1/3/2014 EEP buys 30% of Entity B for Br120 million (Assume through this interest EEP gained Joint control over B). Entity B’s profit = Br80 million for the year ended 31/12/2014 (including Br66.67million from March to Dec). On 20/12/2014 Entity B declared a dividend of Br100 million. Entity B reported loss of Br400 million for year ended 31/12/2015 and declared no dividend. It also reported profit of Br300 million for year ended 31/12/2016 and declared no dividend.
You are way better than my teacher, Thanks a lot
Very clear explanation! Thank you!
clearly explained，very useful，thank you！
Thanks a lot for explanation, but I have question.
If..
Corp A has 25% ownership over Corp B
Corp B Net income is $ 100,000
And BoD decided $ 20,000 as Retained Earning and $ 80,000 distributed as Dividend.
Will Income Recognition still count as 25% * $100,000 or 25% * $80,000?
And what about Dividend declared? does it automatically count as 25% * $80,000?
Hi Generson, So you would record income of $100,000 and then you'd record the dividend at $80,000 in your example, so Dr. Investment in Company for $25,000 and Cr. Equity in Company and you would also do Dr. Dividends Receivable for $20,000 and Cr. Investment in Company for $20,000. At the end of the day your investment increases by $5,000 ($20,000 of Retained Earnings x 25%). We report all income regardless if we receive it or not. Does that make sense?
Nice
how can I record a loss in this case
On 1/3/2014 EEP buys 30% of Entity B for Br120 million (Assume through this interest EEP gained Joint control over B). Entity B’s profit = Br80 million for the year ended 31/12/2014 (including Br66.67million from March to Dec). On 20/12/2014 Entity B declared a dividend of Br100 million. Entity B reported loss of Br400 million for year ended 31/12/2015 and declared no dividend. It also reported profit of Br300 million for year ended 31/12/2016 and declared no dividend.
im screwed
It’s tough, but you’ll get it.