Mistake in Mock 1 Q-18

Balance sheet Carrying value for De Soto should be: 125 + ( 0.3 * 85) - ( 0.3 * 5) = $149 It seems that in answer, they did not deduct the proportional share of the dividends and subtracted the entire $5 dividend instead to arrive at $145.5 125 + ( 0.3 * 85) - 5 = $145.5 can someone please confirm? Thanks

De Soto got $5 dividend so no need to get the proportional share.

but De soto is consolidated under the equity method and in the equity method, B/S carrying value is calculated as following according to text: Book Value of investment + proportional share of income - proportional share of dividends. anyone has any thoughts on this?

If I remember correctly, the dividends were not total for DeSoto, but the Dividends Received by ACI. The Net Income was for the respective companies. this tripped me up too. Sometimes they have stuff set up in a way that doesn’t make sense or isn’t consistent- only goes to re-confirm that its really necessary to read over all the info. I have come up w/ a # that was not an answer option many times and often it is because of a misunderstanding like this.

You got the answer right, it’s 145.5

double-checked it, the divs were attributable to ACI, not the total div payout. 145.5 is correct.

Thanks A LOT GUYS, now it makes way more sense. It was driving me crazy. Def. should be very alert on the actual exam. Thanks again

I know its not, but everytime I see your screenname I read “longdong” instead of “london-GQ”… not quite the same huh??? It makes me smile though. thanks!

akanska, are you female?


no you’re not akanska lol … Sponge_Bob i think we should hit a clut saturday night and try to pick up. My GF will not know about it, i just need some change :wink: