A wholly owned subsidiary declared dividend and half remains unpaid by the end of the year, which of the following is TRUE? a. Only half of the amount of the dividend will be used to reduce the profit of the parent for consolidation purposes. b. The total amount of the dividend will be eliminated in the working paper

A wholly owned subsidiary declared dividend and half remains unpaid by the end of the year, which of the following is TRUE? a. Only half of the amount of the dividend will be used to reduce the profit of the parent for consolidation purposes. b. The total amount of the dividend will be eliminated in the working paper

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 2DIC

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Question

A wholly owned subsidiary declared dividend and half remains unpaid by
the end of the year, which of the following is TRUE?

a. Only half of the amount of the dividend will be used to reduce the profit of
the parent for consolidation purposes.

b. The total amount of the dividend will be eliminated in the working paper
elimination entry by debiting “dividend revenue” account.
c. The transaction will have an impact in the computation of the balance of
NCI at the end.
d. The elimination entry will include a debit to non-controlling interest for the
amount of dividend received by the non-controlling shareholders.

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