[clare429]

Per the question the retained earnings are 4,000 profit (loss of 4,000 + profit of 8,000).

Pre-acquisition there was a loss of 4,000 to April X2 and then a further loss of 2,000 to October (acquisition date).

Therefore post-acquisition profits are 4,000 – (-4000) – (-2000). Double negative makes a positive so post acquisition profits are 10,000.

The 2,000 pre acq loss is accounted for.

Hope this helps.

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