Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › MINI EXERCISE 10 GOODWILL Question 2.
- This topic has 7 replies, 2 voices, and was last updated 8 years ago by MikeLittle.
- AuthorPosts
- February 8, 2016 at 11:43 am #299695
MINI EXERCISE 10 GOODWILL Question 2.
Hi mike,the question says; Suzanna’s retained earnings at 28 February, 2010 were $69 million and at 28 February, 2011 were $82.5 millionret. but in the answer it was, Ret ears b/fwd 69,000,000 and Ret ears 4 months 4,500,000.
my understanding is that ret. earning for 4 month should be 4/12*82.5=27.5 therefore 69m+27.5=96.5 will be figures for pre acq. ret. earg. not 69+4.5=73.5thanks
February 8, 2016 at 6:35 pm #299728How much of that $69 million was made pre-acquisition?
Answer that for me before we go further
February 8, 2016 at 7:23 pm #299742in the question; On 1 July, 2010, Pyotr acquired 18 million shares in Suzanna
and also Suzanna’s retained earnings at 28 February, 2010 were $69 million. thus the whole 69m is pre- acq retained earn.February 8, 2016 at 7:41 pm #299745So why are you trying to tell me that only 4/12 of that $69 million is pre-acquisition?
February 8, 2016 at 7:54 pm #299747my point is that there is another 82.5m ret.earning at 28 February, 2011 apart from retained earnings of 69m at 28 February, 2010.
since the acquisition date was On 1 July, 2010, then 69m at 28 feb, 2010 plus 4/12*82.5=27.5 which is 4 month time apportionment of 82.5m of 28 February, 2011.February 11, 2016 at 2:43 pm #300051Whoa, whoa. Stop right there!
Is the retained earnings figure not a cumulative figure?
Surely what we have here is an amount of $69 million made up to 28 February, 2010 with a further amount of $13.5 million retained earnings made in the year ended 28 February, 2011
You’d better get happy with this and accept that it’s correct because it appears frequently in F7 consolidation exercises!
February 11, 2016 at 8:43 pm #300087Is the retained earnings figure not a cumulative figure? this is the golden question that solved my difficulty to understand the logic. thanks thump up. am good to go now
February 12, 2016 at 11:57 am #300137Well, that’s a relief!
- AuthorPosts
- You must be logged in to reply to this topic.