Where are G/L from outside investments located in the Income Statement? Between EBITDA and EBIT? What about dividends from investments? Are they before taxes? Seems kinda crazy that the subsidiary should pay taxes on its income to have the parent company pay again…? Thanks guys!
its all before taxs I think
It’s in Other Income, after income from operations and before income tax expense.
In reality there are dividends eligible for corporate tax credits which, in essence, eliminates double taxation completely. So even though the subsidiary is paying taxes on earnings then distributing dividends, if the receiver of those dividends is another corporation, they get credited back (gross up dividend).
are you talking about equity method vs. prop consol vs. consol? Anyone want to create a hypothetical example please?
Im just too depressed today from studying employment benefits…i f uckin hate the stuff But im going quickly type out what I think for intercor to try boost confidence, anyone feel anything is wrong below just say All div and interest income for all classifications goes to the IS, except for equity method investments its reduced from the investment account instead. All realised g&l also goes to income statement All unrealised g&l goes to IS, except for available for sale securities, however under IFRS unrealised fx goes to IS for available foe sale. Under Equity method you just have the investment account on balance sheet, and your share of the income in the IS Under consolidation/aquisition method all line items added up, except for equity. Your equity value depends on weather you use full or partial, its higher under full. In the Income statement you subtratc minority interests (What to do with dividends between firms?) Under prop consolidation for IFRS Joint ventures, just your share of everything including equity section. (IFRS also alows equity method for JV) GAAP requires equity method for JV’s
And ill continue, all financial asset investments carried at Fair value, except for Held to Maturity investments carried at ammortised cost. And should of said that unrealised g&l for avs goes to other comp I think thats it
AndrewUNH Wrote: ------------------------------------------------------- > are you talking about equity method vs. prop > consol vs. consol? Anyone want to create a > hypothetical example please? I am talking about the NI of the subsidiary that the parent reports on their I/S. Let’s say, you own 50% of XYZ and their NI is $100. your I/S entry would be $50. And that’s where tax credit comes into play. I shouldn’t have used “dividend” for a term.
^We dont need to know this for exam right?