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.
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1/7/2004
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1/10/2004
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£
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£
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Total dividends
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: Paid
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40,000
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40,000
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Proposed
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60,000
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60,000
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100,000
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100,000
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Post acquisition dividends
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(6/12 x 100,000)
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50,000
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25,000
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Pre-acquisition dividend to cost of control
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Holding company share of dividend:
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Interim receive (80/100 x 40,000)
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32,000
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Interim proposed (80/100x 60,000)
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48,000
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48,000
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80,000
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48,000
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Less: Holding company share of post acquisition of dividends
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(80/100 x 50,000)
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40,000
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(20,000)
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40,000
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28,000
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