Consolidating balance sheet after acquisition Adult dating no credit card required

In the above example S Ltd pays a dividend of £10 Ltd, so that when P Ltd pays a dividend of £14 m.the drain on its cash resources is only a net £4 m.The above covered the situation in which the dividend paid by the subsidiary is declared and paid out of income arising after the date of the acquisition.Such a dividend is said to be paid out of reserves which have been capitalized for group accounting purposes and such a dividend amounts to a capital return on the purchase price paid by the parent for the shares it bought in the subsidiary.In effect it amounts to a refund of part of the purchase price and is so treated in the accounts.Only in the case of a dividend which passes outside the group are the group income and net assets reduced.

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P Ltd will include S Ltd in its debtors as a debtor for £2000, and S Ltd will include P Ltd among its creditors for £2000.Just the same rules apply for loans made between the various subsidiaries and each other if they are members of the same group.The same procedure applies for cancelling out in the group accounts any inter-company current accounts.In fact much of the secret of dealing with problems of consolidating accounts lies in an appreciation of the significance of the various dates involved.The date of acquisition is important for calculating the goodwill and considering whether any dividends are being paid out of pre-acquisition income, and the date of the final accounts is important for determining the income made since acquisition and the total of the minority interest.

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