Dividends received

Learning objectives

• Record dividends received from the associate as a reduction in the carrying amount of the investment.L1, L2
• Calculate the carrying amount after the share of profit or loss and dividends.L2

Normative references

• IAS 28 §10Under the equity method, the investment in an associate or a joint venture is initially recognised at cost, and its carrying amount is then increased or decreased to recognise the investor's share of the investee's profit or loss after the date of acquisition, that share being recognised in the investor's profit or loss; distributions received reduce the carrying amount; adjustments are also required for the investor's share of changes in the investee's other comprehensive income (for example, revaluation of property, plant and equipment, foreign exchange translation differences), recognised in the investor's other comprehensive income.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

3 questions

• Dividends received from an associate accounted for under the equity method are recognised as income by the investor.L1
• Brise SA, an associate accounted for under the equity method by Alba SA, pays Alba a dividend of {dividend_received}. Case convention: Alba has already recognised its share of Brise's profit. Record the entry for receipt of the dividend.L2
• The carrying amount of Alba SA's interest in Brise SA, an associate accounted for under the equity method, is {opening_carrying} at the start of the year. During the year, Alba's share of Brise's profit is {share_of_profit}, its share of other comprehensive income is {share_of_oci}, and Alba receives {dividends_received} in dividends. Case convention: no impairment and no other movement. Calculate the closing carrying amount.L2