Chapter 28 Key- Explain, with examples
Subject: General Questions   / College life
Question
55. Explain, with examples, the difference between dividend payments out of pre-acquisition profits and dividend payments out of post-acquisition profits, and the manner in which they are accounted for in consolidation accounting.
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56. Explain, with examples and the assumptions made, why it is necessary to pass consolidation journal entries to adjust for unrealised profits existing in opening inventory.
57. Explain why unrealised profits and losses between entities within a group are eliminated on consolidation. Discuss when these transactions are realised for consolidated statement purposes.
58. Explain the accounting treatment for impairment to the subsidiary investment when dividends have been paid out of pre-acquisition profits.
59. Discuss the reasoning behind the elimination all dividends receivable/payable between entities within the group during the consolidation process.
