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hi
I am struggling to understand how to calculate RE at acquisition. The RE at the reporting date are always provided but not at the acquisition date, and in the answer book Kaplan there is nothing to tell how this was calculated. eg Revision kit Kaplan exercise number 370 “Premier” or 380 “Polestar”.
many thanks, Anna
Hi,
You need to use the profit figure given in the question, pro-rate it for the post-acquisition profits and then deduct this figure from the retained earnings at the reporting date.
I think that there was a slight issue with some of the questions in that they didn’t give you the profit for the year when they adjusted the older F7 exam questions for the newer style FR exam, so don’t worry too much.
Thanks
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