April Ltd owns 100% of the issued share capital of Sun Ltd.During the year ended 31 December 20X1 Sun Ltd declared and paid a dividend of $850 000 out of post acquisition profits.Which combination of amounts correctly shows the total amount of dividend revenue, if any, in April Ltd's financial statements and in its consolidated financial statements?
A)$\begin{array}{llcc}
\text { April Lad's statements(\$)} & \text {April Ltd's consolidated statements(\$) } \
850000&850000\
\end{array}$

B)$\begin{array}{llcc}
\text { April Lad's statements(\$)} & \text {April Ltd's consolidated statements(\$) } \
0&0\
\end{array}$

C)$\begin{array}{llcc}
\text { April Lad's statements(\$)} & \text {April Ltd's consolidated statements(\$) } \
0&850000\
\end{array}$

D)$\begin{array} { l l }
\text { April Ltd's statements (\$) } & \text { April Ltd's consolidated statements (\$) } \
850000 & 0
\end{array}$

Question

April Ltd owns 100% of the issued share capital of Sun Ltd.During the year ended 31 December 20X1 Sun Ltd declared and paid a dividend of $850 000 out of post acquisition profits.Which combination of amounts correctly shows the total amount of dividend revenue, if any, in April Ltd's financial statements and in its consolidated financial statements?
A)$\begin{array}{llcc}
  \text {  April Lad's statements(\$)} &   \text {April Ltd's consolidated statements(\$) } \
850000&850000\
\end{array}$

B)$\begin{array}{llcc}
  \text {  April Lad's statements(\$)} &   \text {April Ltd's consolidated  statements(\$) } \
0&0\
\end{array}$

C)$\begin{array}{llcc}
  \text {  April Lad's statements(\$)} &   \text {April Ltd's consolidated  statements(\$) } \
0&850000\
\end{array}$

D)$\begin{array} { l l } 
\text { April Ltd's statements (\$) } & \text { April Ltd's consolidated statements (\$) } \
850000 & 0
\end{array}$

Quizplus · Accepted Answer

In April Ltd's individual financial statements, dividends received from Sun Ltd would be recognized as dividend income. However, in the consolidated financial statements, intercompany transactions, including dividends between the parent and subsidiary, are eliminated. Therefore, there would be no dividend revenue recognized in the consolidated statements.

April Ltd Owns 100% of the Issued Share Capital of Sun