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    nadir
    Participant
    • Topics: 64
    • Replies: 39

    See OT course notes page 30, see the Retained earnings of the business. To arrive to 32000 it has taken 25000+ (9600-2600)*100%. WHY HAS MINUS 2600??? WHY???
    PLEASE REPLY


    Avatar of MikeLittle
    MikeLittle
    Keymaster
    • Topics: 0
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    Because 2,600 was achieved by the newly acquired subsidiary BEFORE the acquisition. Included in Consolidated Retained Earnings are only H’s own plus H’s share of S POST-ACQ retained.

    In fact, the footnote at the end of the space for your answer actually explains why the 2,600 is deducted!

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