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Good Evening,
I have covered chapter 4 this evening and have the following questions for example 1 – FV adjustments
1. In your lecture, you stated in working 2 that Share Capital at year-end would be the same at acquisition, however in the answers, it shows as 4,000. I assume the 4,000 is a typo? therefore, the post acquisition remains at 5,000 rather than 4,0000?
2. For my understanding, for W5) Retained Earnings, why do we use the post acquisition rather at acquisition?
I apologise you have already answered these questions previously, if so, do direct me to your responses.
Thanks again
HarinderHi Harry,
1. Yes, the share capital will never change so it must be a typo.
2. The retained earnings shows ownership and the group has only owned the profits of the subsidiary since the acquisition date. Prior to that date the profits wee owned by the previous owners of the subsidiary.
Thansk
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