The effect of a pro-rata share issue for cash by a subsidiary on the consolidated cash flow statement:
A)is always totally eliminated
B)is always included
C)is only included to the extent the shares are taken up by shareholders who are not members of the group (they are non-controlling interest shareholders)
D)is only included to the extent the shares are taken up by the parent

Question

Quizplus · Accepted Answer

A pro-rata share issue for cash by a subsidiary is only included in the consolidated cash flow statement to the extent that the shares are taken up by shareholders who are not members of the group. This is because the funds raised from the share issue will only affect the cash flow of the subsidiary and the non-controlling interest shareholders, and not the parent company's cash flow. The pro-rata share issue will not be eliminated completely from the consolidated cash flow statement.

The Effect of a Pro-Rata Share Issue for Cash by a Subsidiary