While I’ve got a solid understanding of all of the intercorporate investments methods, I can’t figure out how dividends are treated in the Consolidation method. I know that they don’t figure in to any of the calculations I’ve had to make, but it seems like they just vanish. The minority interest plug only includes (1-% owned)xSubsidiary Income. Where do the dividends go?
What kind of dividends? Dividends paid by the parent/sub, or dividends received by the parent/sub?
Cash money, baybay.
bpdulog Wrote: ------------------------------------------------------- > What kind of dividends? Dividends paid by the > parent/sub, or dividends received by the > parent/sub? Sorry - dividends paid by the sub. So if you were using the equity method and controlled 25% of a subsidiary that paid $10 in dividends, the BS investment would be reduced by $2.5. Can’t figure out how these are treated in Consolidation.
Cubemonkey Wrote: ------------------------------------------------------- > bpdulog Wrote: > -------------------------------------------------- > ----- > > What kind of dividends? Dividends paid by the > > parent/sub, or dividends received by the > > parent/sub? > > > Sorry - dividends paid by the sub. So if you were > using the equity method and controlled 25% of a > subsidiary that paid $10 in dividends, the BS > investment would be reduced by $2.5. Can’t figure > out how these are treated in Consolidation. I hope I’m interpreting this correctly, but the dividends paid from the sub to the parent would be eliminated altogether since that would be considered an intercompany transaction.
bpdulog Wrote: ------------------------------------------------------- > Cubemonkey Wrote: > -------------------------------------------------- > ----- > > bpdulog Wrote: > > > -------------------------------------------------- > > > ----- > > > What kind of dividends? Dividends paid by the > > > parent/sub, or dividends received by the > > > parent/sub? > > > > > > Sorry - dividends paid by the sub. So if you > were > > using the equity method and controlled 25% of a > > subsidiary that paid $10 in dividends, the BS > > investment would be reduced by $2.5. Can’t > figure > > out how these are treated in Consolidation. > > I hope I’m interpreting this correctly, but the > dividends paid from the sub to the parent would be > eliminated altogether since that would be > considered an intercompany transaction. You are interpreting it correctly. That makes sense - didn’t know if that’s how it was treated. Thanks.