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At the date of acquisition, Strata produced a draft statement of profit or loss which showed it had made a net loss after tax of $2 million at that date. Paradigm accepted this figure as the basis for calculating the pre- and post-acquisition split of Strata’s profit for the year ended 31
March 2013.
(PARENT) (SUB)
paradigm strata
Retained earnings/(losses) – at 1 April 2012 19,200 (4,000) for year ended 31 March 2013 7,400 8,000
please how do you ascertain this retained earning/loss in determining post acquisition profit.
In future you must ask this sort of question in the Ask the Tutor Forum and not as a comment on a lecture.
If there was a loss of $2M at the date of acquisition and the retained earnings are $8M at the 31 March 2013 (I am guessing that the figures you have typed are given in $ thousands), then they must have made a profit of $10M since acquisition.