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Dear Sir,
Kindly help me understand the following concept that I’ve probably missed out.
The answer key to the particular Question says:
”The $11 million service cost and interest figure above includes the carrying
amount of the subsidiary’s defined benefit obligation at the acquisition date.
Therefore, the actual expense is $10m ($11m – $1m). This is added back in the
reconciliation between profit before tax and cash generated from operations.”Please explain the need to deduct that $1m, I understand doing so in movement of working capital but why here?
Only consolidate post acquisition earnings.
Post acquisition expense is 10 charged in P&L
This is not a cash flow so is added back in the reconciliation
Contributions paid are then deducted in the CFS
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