Angus Limited owns 80% of the share capital of Boris Limited. Boris Limited paid a dividend of $150 000 during the financial period. The adjustment entries in the consolidation worksheet for the dividend include:

Question

Quizplus · Accepted Answer

Since Angus Limited owns 80% of the share capital of Boris Limited, it is entitled to receive 80% of the dividend paid by Boris Limited. Therefore, the consolidation entry should include a debit to Dividend revenue for 80% of $150 000, which is $120 000. Option A is incorrect because it implies that the dividend was paid by the parent company. Option C is incorrect because it implies that the dividend has not been paid yet. Option D is incorrect because it implies that the parent company owes money to the subsidiary for the dividend.

Angus Limited Owns 80% of the Share Capital of Boris