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  1. Avatar of crye says

    Ref — June 2009 Question 1 – Pacemaker.

    The Q says “Syclop’s retained earnings at the date of acquisition were $120 million”.
    In calculating Syclop’s retained earnings, Post-acquisition R/E is worked as … 260 – 120 = 140.
    120M, the figure for R/E 2 years back is used. That’s understandable as we’re dealing with the financial ‘position’.
    —But how would this differ if we were to be working on income Statement, which would only be referring to mov’ts for the year, not from acquisition?

    Thanks!

  2. avatar says

    I don t understand why the interest arising from the loan notes does not generate any adjustment in RET computation…

    For consolidation we should not have:
    - minus on Peacemaker RET100% interest for 2 years
    - plus on Syclop 80% interest for 2 years…?

    • Avatar of MikeLittle says

      @gaabita, Hi, I don’t have the question in front of me but is this noot a situation where the parent issues a loan note as PART of the purchase consideration? In which case, the loan is not from the subsidiary to the parent. It’s a borrowing by the parent from THE ORIGINAL SHAREHOLDERS of Syclops, it’s not a borrowing from Syclops Limited.

      That will also explain your next point about no elimination on consolidation.

      I’ll need to check the question this evening to make sure that what I’m posting now does make sense

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