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November 24, 2012 at 3:51 am
Ref — June 2009 Question 1 – Pacemaker.
The Q says “Syclop’s retained earnings at the date of acquisition were $120 million”.
In calculating Syclop’s retained earnings, Post-acquisition R/E is worked as … 260 – 120 = 140.
120M, the figure for R/E 2 years back is used. That’s understandable as we’re dealing with the financial ‘position’.
—But how would this differ if we were to be working on income Statement, which would only be referring to mov’ts for the year, not from acquisition?
June 12, 2012 at 12:56 pm
and then why the loan notes are not eliminated at consolidation…?
June 12, 2012 at 11:43 am
I don t understand why the interest arising from the loan notes does not generate any adjustment in RET computation…
For consolidation we should not have:
– minus on Peacemaker RET100% interest for 2 years
– plus on Syclop 80% interest for 2 years…?
June 12, 2012 at 2:31 pm
@gaabita, Hi, I don’t have the question in front of me but is this noot a situation where the parent issues a loan note as PART of the purchase consideration? In which case, the loan is not from the subsidiary to the parent. It’s a borrowing by the parent from THE ORIGINAL SHAREHOLDERS of Syclops, it’s not a borrowing from Syclops Limited.
That will also explain your next point about no elimination on consolidation.
I’ll need to check the question this evening to make sure that what I’m posting now does make sense
June 12, 2012 at 3:17 pm
@MikeLittle, Hi, purchase consideration it is 🙂 thank you again
June 3, 2012 at 11:36 pm
how come the investment in vardine was not used in the calculations on investment of pacemaker (345-268) ?
June 12, 2012 at 11:32 am
@mosko1, ii) says:Pacemaker has not yet recorded the investment in Vardine.
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