Skip to content

ACCA Strategic Professional · Strategic Business Reporting (International) · Group accounting including statements of cash flows

Hamble Group presents its consolidated statement of cash flows under IAS 7. During the year the parent paid dividends of $400,000 to its own shareholders and a subsidiary, 80% owned, paid dividends of $100,000 in total (of which $20,000 went to the non-controlling interest). Where should the $20,000 paid to the non-controlling interest be shown in the consolidated statement of cash flows?

Dividends paid to non-controlling interests appear as a financing outflow in the consolidated statement of cash flows, because the non-controlling shareholders are owners of group equity. Only the portion paid to the parent is intra-group and eliminated; the amount paid outside the group is a real cash outflow.

  1. AAs a financing activity outflow, as it is a cash flow to an owner of the group's equityCorrect
  2. BAs an operating activity outflow, as it reduces profit attributable to the group
  3. CAs an investing activity outflow, as it is a return on an investment
  4. DIt is eliminated on consolidation because it is an intra-group transaction

Explanation

Dividends paid to non-controlling interests are cash flows to equity holders of the group, so they are shown as financing outflows. The $80,000 paid to the parent is intra-group and eliminated. Showing the $20,000 as operating would misclassify an equity distribution.

Did you get it right without looking?

One question tells you little. A timed set on Group accounting including statements of cash flows shows your real accuracy, how long you take and where you lose marks.

Practise Group accounting including statements of cash flowsFree diagnostic mock

More Group accounting including statements of cash flows questions