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This is what I got from the Notes.
If a Company P (“P”) invest 30% in company S (“S”) for $1,000 and S reports a 400 profit and dividend of 100 calculate P’s B/S, I/S, CF for cost and equity method.
Cost Method:
Balance Sheet: 1,000 Investment in S
Income Statement: 30 (100 x 30%)
Cashflow Statement: 30 (100 x 30%)
Equity Method:
Balance Sheet: 1,090 (1000+120-30)
Income Statement: 120 (400 x 30%)
Cashflow Statement: 30 (100 X 30%)
My question is how come the dividend is not recorded in the Income Statement for the equity method. In the Notes, it just says under equity method dividends are under CF.
However, on the B/S, you’ve got an entry on the Asset side of 1,000 in Investment in Company S + % of S’s income - % of S’s dividend. On the Equity (RE) side you have an increase in 120 (from the +120 in I/S). What about the “minus dividend” portion? As of right now, the B/S isn’t balanced. Where do you balance the -30?
Don’t you decrease the -30 in the I/S as well? and therefore recording a -30 in RE? |
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发表于 2013-4-3 01:55
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