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Consolidation of financial statements

In practice problem 4 . In video for dividend of 20000 is added to post acquisition of 52000 then 72000 came . And then sir deducted 20000 from pre aquisition profit after time adjustment and the value came to 146000 .. instead of that can we deduct 20000 from pre acquisition ie 30000 -20000 =10000 before time adjustment then post acquisition column would be 72000 (10000-82000) .. Can we do like this . Please reply I am fully confused ..

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Enuguru Sai Nithin

Enuguru Sai Nithin

CA Inter

76K+

25-Mar-21 00:43

33

Answers (6)

You cannot adjust for dividend before time adjustment as, profits on date of acquisition are not given


ruchi lahoti

ruchi lahoti

Moderator

25-Mar-21 11:43

You cannot adjust for dividend before time adjustment as, profits on date of acquisition are not given

Ok but why did sir added 20000 in post acquisition column ???


Enuguru Sai Nithin

Enuguru Sai Nithin

CA Inter

76K+

25-Mar-21 11:46

Ok but why did sir added 20000 in post acquisition column ???

Because dividend was paid only on 1st Aug 20X1.


ruchi lahoti

ruchi lahoti

Moderator

25-Mar-21 11:53

Because dividend was paid only on 1st Aug 20X1.

It is paid on 1 aug it means relates to pre acquisition .then why did sir added it to post acquisition column and again after time adjustment sir deducted from pre acquisition . Can you please elaborate the explanation , I did not understand it


Enuguru Sai Nithin

Enuguru Sai Nithin

CA Inter

76K+

25-Mar-21 11:57

It is paid on 1 aug it means relates to pre acquisition .then why did sir added it to post acquisition column and again after time adjustment sir deducted from pre acquisition . Can you please elaborate the explanation , I did not understand it

Though the dividend relates to pre-acquisition it is paid only out of current year profits. This made us add back to the post acquisition column as there wass outflow from current profits. After time adjustments the same dividend is deducted as it belongs to pre-acquisition period.


ruchi lahoti

ruchi lahoti

Moderator

25-Mar-21 12:06