Question

P Ltd controls A Ltd (75%) and A Ltd controls B Ltd (65%). The profit of...

P Ltd controls A Ltd (75%) and A Ltd controls B Ltd (65%). The profit of A Ltd includes $11700 dividend revenue (65% of $18,000) from B Ltd. There is also a final dividend of $16,000. A Ltd’s share of the dividend paid by B Ltd is from its current profit. Required: a) Prepare journal entries to recognise the dividend revenue from B Ltd to A Ltd, giving consideration to Minority Interests. b) Then provide the journal entries for the final dividend for A Ltd and the Minority Interests.

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Answer #1

Journal Entries:

Date

Particulars

LF

Debit $

Credit $

A Ltd. a/c…… …...Dr

  To dividend payable a/c

(B Ltd. Pay the dividend to A ltd. as a monetary interest)

11,700

11,700

A Ltd. a/c…… …...Dr

  To dividend payable a/c

(B Ltd. Pay the final dividend to A ltd. as a monetary interest)

27,700

27,700

Calculation of final dividend:

65% from the current profit

Current profit is $18,000

Current dividend $18,000X65% =11,700

Final dividend : 11,700+16,000=27,700

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