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including 10 unrealized gain on land
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| Page | 2/3 | | Date | 14.11.2022 | | Size | 0.59 Mb. | | #59951 |
| beams11 ppt09-EDITincluding 10 unrealized gain on land
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NCI share, Sal (-SE)
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10.2
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Dividends (+SE)
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6.0
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NCI, Sal (+SE)
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4.2
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Capital stock, Tie (-SE)
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100.0
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Retained earnings, Tie (-SE)
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80.0
|
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Goodwill (+A)
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12.0
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Investment in Tie (Sal & Pet’s) (-A)
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153.6
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NCI, Tie (+SE)
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38.4
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Capital stock, Sal (-SE)
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200.0
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Retained earnings, Sal (-SE)
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50.0
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Goodwill (+A)
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12.0
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Investment in Sal (-A)
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183.4
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NCI, Sal (+SE)
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78.6
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Consolidation Worksheet
Income statement:
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Pet
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Sal
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Tie
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DR
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CR
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Consol
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Sales
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200.0
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150.0
|
100.0
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15.0
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435.0
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Income from Sal
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13.8
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13.8
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0.0
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Income from Tie
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12.0
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4.0
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16.0
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0.0
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Gain on land
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10.0
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10.0
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0.0
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Cost of sales
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(100.0)
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(80.0)
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(50.0)
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5.0
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15.0
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(220.0)
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Other expenses
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(40.0)
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(35.0)
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(30.0)
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(105.0)
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NCI share, Sal
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10.2
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(10.2)
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NCI share, Tie
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4.0
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(4.0)
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Controlling interest share
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95.8
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39.0
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20.0
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95.8
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Statement of retained earnings:
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Pet
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Sal
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Tie
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DR
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CR
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Consol
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Beginning retained earnings
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223.0
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50.0
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80.0
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80.0
50.0
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223.0
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Add net income
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95.8
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39.0
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20.0
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95.8
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Deduct dividends
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(40.0)
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(20.0)
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(10.0)
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8.0
2.0
14.0
6.0
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(40.0)
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Ending retained earnings
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278.8
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69.0
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90.0
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278.8
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Balance sheet:
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Pet
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Sal
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Tie
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DR
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CR
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Consol
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Other assets
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50.6
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19.6
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85.0
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155.2
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Inventories
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50.0
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40.0
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15.0
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5.0
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100.0
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Plant assets, net
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400.0
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200.0
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100.0
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10.0
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690.0
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Investment in Sal (70%)
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183.2
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0.2
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183.4
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0.0
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Investment in Tie (60%, 20%)
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121.2
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40.4
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8.0
153.6
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0.0
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Goodwill
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12.0
12.0
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24.0
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Total
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805.0
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300.0
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200.0
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969.2
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Pet
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Sal
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Tie
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DR
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CR
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Consol
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Liabilities
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126.2
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31.0
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10.0
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167.2
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Capital stock
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400.0
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200.0
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100.0
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100.0
200.0
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400.0
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Retained earnings
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278.8
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69.0
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90.0
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278.8
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Noncontrolling interest
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2.0
4.2
38.4
78.6
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123.2
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Total
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805.0
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300.0
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200.0
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969.2
| 2: Mutual Holdings Indirect and Mutual Holdings Types of Mutual Holdings
40%
Parent owns 80% of A and the consolidated entity holds 10% of the Parent’s common stock in treasury Connecting affiliates mutually owned Parent owns 80% of A and 20% of B. Subsidiary A has 40% of B and Subsidiary B has 20% of A. Simultaneous equations will be used.
Parent
Subsidiary A
10%
80%
Parent
Subsidiary A
Subsidiary B
20%
20%
80%
Approaches for Mutual Holdings Ada dua pendekatan yang digunakan - Treasury stock approach
- Conventional approach
If parent stock is held by subsidiary - Use either the treasury stock or conventional approach
If subsidiary stock is mutually held - Use the conventional approach only
Treasury Stock or Conventional - Treats parent mutually held stock as treasury stock
- Parent has fewer shares outstanding
- "Interdependency" assumed eliminated by treasury stock treatment
Conventional method for mutual holding - Treats stock as retired
- Parent has fewer shares outstanding
- Simultaneous set of equations
- Fully recognizes interdependencies
Parent Stock Mutually Held One or more affiliates holds parent company stock Treasury stock method - Recognize treasury stock at cost of subsidiary's investment in parent
- Reduce Investment in subsidiary
Conventional method - Parent treats stock as retired, reducing common stock, and additional paid in capital or retained earnings
- Reduce Investment in subsidiary
Comparison - Income from Subsidiary for the parent dividends paid to subsidiary
Methods result in different: - Equity accounts
- Treasury stock
- Retired common stock
- Consolidated retained earnings
- Noncontrolling interest
Par owns 90% of Sal acquired at fair value equal to cost, no goodwill. Sal owns 10% of Par. At the start of 2012: Investment in Sal, $297 Noncontrolling interest, $33 Sal's total stockholders' equity - Common stock $200
- Retained earnings $130
During 2012, Separate income: Par $60, Sal $40 Dividends: Par $27, Sal $20 Par Uses Treasury Stock Method Allocations of income to CI and NCI: Controlling interest share $95.7 Noncontrolling interest share $4.3 Par's Income from Sal $38.7 – 3.0 = $35.7
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Par
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Sal
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CI
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NCI
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Total
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Separate Income
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60.0
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40.0
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100.0
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Dividend income
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(3.0)
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3.0
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Allocate:
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Sal 90% Par: 10% NCI
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38.7
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(43.0)
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4.3
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Par 100% CI
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(95.7)
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95.7
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Totals
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95.7
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4.3
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100.0
| Par's Equity Method Entries
Cash (+A)
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18.0
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Investment in Sal (-A)
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18.0
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for dividends
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