Illustration of pre-aquisition, Financial Accounting

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Illustration of Pre-Aquisition

H Ltd.. Acquired 80% of S Ltd. during the year ended 31/12/04.  S Ltd. paid an interim dividend of  40,000 on 30th September and as at 31/12/04 has proposed a dividend of 60,000.

Required:
Compute the pre-acquisition dividend to cost of control assuming that H Ltd. acquired S Ltd. on the following dates;

i) 1st July, 2004,  ii)  1st October, 2004 – H did not receive share of interim dividend.

 

 

1/7/2004

1/10/2004

 

 

£

£

Total dividends

: Paid

40,000

40,000

 

  Proposed

60,000

60,000

 

 

100,000

100,000

 

 

 

 

Post acquisition dividends

(6/12 x 100,000)

50,000

25,000

Pre-acquisition dividend to cost of control

 

 

 

Holding company share of dividend: 

 

Interim receive (80/100 x 40,000)

 

32,000

 

 

Interim proposed (80/100x 60,000)

48,000

48,000

 

 

80,000

48,000

Less: Holding company share of post acquisition of dividends

 

 

(80/100 x 50,000)

 

 

40,000

 

 

(20,000)

 

 

40,000

28,000

 


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