A Ltd holds a 60% interest in B Ltd. On 1 January 2014 B Ltd paid an interim dividend of $25 000 and on 30 June 2014 B Ltd declared a final dividend of $15 000.
The NCI journals at 30 June 2014 will include which of the following?
A) DR Interim dividend paid $10 000
B) DR NCI $16 000
C) CR Dividend receivable $6 000
D) CR Final dividend declared $9 000

Question

Quizplus · Accepted Answer

The NCI (non-controlling interest) owns 40% of B Ltd, thus they are entitled to 40% of the dividends declared. Therefore, the NCI should be credited for $6,000 (40% of $15,000 final dividend declared). There is no need to record the interim dividend paid as it would have already been accounted for in the previous period's NCI calculation. There is no need to credit the final dividend declared as this would have been recorded in B Ltd's retained earnings account.

A Ltd Holds a 60% Interest in B Ltd