Illustration

Subsidiary S had in issue 400,000 ordinary shares and RM100,000 10% debentures. Scenario 1
H had acquired 300,000 of the ordinary shares and RM40,000 of the debentures. Sub had updated its books with dividend/interest payable
At year end 31/12/201x8, S provided for the year’s interest of RM 10,000 [10% x 100k] H had recorded its portion of dividend/interest receivable
and declared RM 20,000 ordinary dividend.
Scenario 2
No records were made in the books of Sub or books of H
% of acq OSC = 75% nci = 25%
% of acq in Deb = 40% Other Deb. Holders = 60% Scenario 3
Sub had updated its books with dividend/ interest payable
75% H 20,000 x 75% = 15,000 No records made in books of H
OSC Div = 20,000
25% nci 20,000 x 25% = 5,000 --> CSOFP
Div payable to NCI

40% H 10,000 x 40% = 4,000

Deb Int = 10,000
60% Other DH 10,000 x 60% = 6,000 --> CSOFP
Int payable to ODebH.

Action @ Action @
Scenario 1 entity FS Conso FS Scenario 1 - Journal entry
SUB S √ - eliminate intra-co div/deb interest Dr Debenture interest payable, S 4,000
HLDGS H √ - eliminate intra-co div/deb interest Cr Debenture interest receivable, H 4,000

SOFP as at…… Dr OS dividend payable, S 15,000

H S Cr Debenture interest receivable, H 15,000
Assets
Debenture interest receivable 4,000
Dividend receivable 15,000

Liabilities
Debenture interest payable 10,000 - 4,000 = 6,000
OS Dividends payable 20,000 - 15,000 = 5,000
 Action @ Action @
Scenario 2 entity FS Conso FS Scenario 2 - Journal entry (short cut)
SUB S x Update eliminate intra-co div/deb interest Dr Retained earnings, S 10,000
HLDGS H x Update eliminate intra-co div/deb interest Cr Retained earnings, H 4,000
Cr Debenture interest payable (to Other DH) 6,000
SOFP as at……
H S Dr Retained earnings, S 20,000
Assets Cr Retained earnings, H 15,000
Debenture interest receivable nil Cr OS dividend payable (to nci) 5,000
Dividend receivable nil

Liabilities
Debenture interest payable nil
OS Dividends payable nil

Action @ Action @
Scenario 3 entity FS Conso FS Scenario 3 - Journal entry (short cut)
SUB S √ - eliminate intra-co div/deb interest Dr Debenture interest payable, S 4,000
HLDGS H x Update eliminate intra-co div/deb interest Cr Retained earnings, H 4,000

SOFP as at……
H S Dr OS dividends payable, S 15,000
Assets Cr Retained earnings, H 15,000
Debenture interest receivable nil
Dividend receivable nil

Liabilities
Debenture interest payable 10,000 - 4,000 = 6,000
OS Dividends payable 20,000 - 15,000 = 5,000