Groups accounts

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  • Profile photo of nadir
    nadir
    Participant

    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


    Profile photo of MikeLittle
    MikeLittle
    Keymaster

    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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