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Group Accounts The Consolidated Statement of Financial Position (1b)
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and for the ‘goodwill’ part why we dont add the post retained earnings and only add the pre retained earnings?
We are comparing what the parent paid for the shares, with what the subsidiary was ‘worth’ at the time we bought the shares.
At the date we bought the shares, the subsidiary had not even earned the post-acquisition amount, so it would impossible to include them!!!
i wanted to know why are aren’t we adding the top $15,000 retained earnings? They were earned on the day the company was acquired and should be added to the total retained earnings in the cons. balance sheet?
Retained earnings are only those that we earned since the date the parent bought the shares in the subsidiary i.e. the post-acquisition earning.
The earnings that the subsidiary had made before the date of acquisition (the pre-acquisition earnings) had been paid for – the parent paid for them when they bought the shares in the subsidiary. It was part of the reason that the parent paid as much as they did, and so they are included in the calculation of goodwill.
Dear Sir!
Will you please tell me, how we will identify in the exam whether our question is correct or there was some mistake in it.
I think you mean whether your answer is correct
You will not know – you will be given the mark after the exam, but you will not be told which questions you got right or wrong.
What a brilliant lecture!!!! Thank you very much
hello,
my question is how if the goodwill arising on consolidation has suffered an impairment loss of $5000, how to prepare revised consolidated statement of financial position ?
simply amazing
Great Thanks!
Hey guys.Can someone help me on how to download or watch the lecture videos
@mbele, Please visit the support page: http://opentuition.com/support/
preparing for cbe n wud greatly appreciate helpful hints
thanx opentuision, it was the last resort for my friends … now i am sure they will pass the exam …
very helpful.
lecture appears to be cool
why don’t we add the share capital of both P and S company in the consolidating balance sheet that is 50,000 and 10,000?
@maniali272, Because the consolidated accounts treat it as though it is one big company owned by the shareholders of the holding company.
The amount of the investment in the subsidiary ‘cancels’ out the share capital and reserves of the subsidiary.
many thanks,well understood
Thank you!!!!!!!!!!
Thanks opentuition !
Excellent
very helpful.