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Hi,

here my case.

Company A bought 100% of company B in September for 800k euros.
In October, the shareholders' meeting of company B approved the distribution of dividends for 700k euros (available cash at the moment).
In November, after collecting dividends, company A sold 100% of company B to the managing director for 50k euro.

What Ifrs applies to this case?
Ifrs 9? Ifrs 5?

Thank you for your help.

various including https://ifrscommunity.com/knowledge-bas ... tatements/
what is your specific question?

Ok, my doubts are the following.

Company A accounts for dividends received in the income statement (financial income).
Then company A sells the investment and recognises a capital loss (financial charges).

At the end of year, preparing the financial statement, has company A to reclassified the profit and loss by this operation as Ifrs 5 in the line "Profit from discontinued operations" or can left dividend and capital loss into the financial income/charges' line?

Thank you

I think only gain or loss from disposal of the entity will be shown in the P&L. The dividend is eliminated at the conso level.

Unless the entity you discontinue is a whole segment of your business, we don't class the P&L in one line.

Leo wrote: ↑05 Dec 2022, 21:48 The dividend is eliminated at the conso level.

You could assume that either:
1/ The OP doesn't know that dividends are eliminated in consolidated financial statements, or
2/ The question concerns presentation in separate financial statements.

Curious to know why you assumed scenario 1/

It seems to me that EUR 700k of distribution wasn't a dividend but a repayment of initial investment, so I would account for it as DR cash / CR investment without P&L impact

https://ifrscommunity.com/knowledge-bas ... -dividends

I assumed scenario 1 because of ifrs5 why OP would have asked about discontinuing activities in the PL of the sub if it's individual financial statements ?

I don't see any reference to P&L of the sub in OP's questions...

Thank you for the answer.

The distribution was made by deliberating the accumulated profits of previous years. For this reason I accounted for dividends into P&L. In my view, only if i'm distributing
previously paid-in capital, I have no impact in P&L.

Is it correct?

in general your approach is correct, but here it is evident that this dividend was paid from profits earned before this company became a subsidiary, so it isn't a dividend income for the new parent, but repayment of initial investment

in any case, I wouldn't consider dividend income from a subsidiary as a discontinued operation under IFRS 5 as it doesn't "represent a separate major line of business or geographical area of operations" from the perspective of separate financial statements of the parent (it is, so to say, outside of the parent)

Hi Marek,

It's clear. Thank you very much.