Illustration of pre-aquisition, Financial Accounting

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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.

		1/7/2004	1/10/2004
		£	£
Total dividends	: Paid	40,000	40,000
	Proposed	60,000	60,000
		100,000	100,000

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

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