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Hi MikeLittle, I would like to ask a question. Could you please help to explain this question? I don’t understand this question clearly.
(i) 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.
Thank you.
Without the question in front of me, I take it that this is a mid-year acquisition. Say Strata made a profit for the year of, say, $8,000. We know that in the pre-acquisition period the company had made a loss of $2,000. Therefore, if the year’s results were a profit of $8,000, that means that the post-acquisition performance must have been a profit of $10,000
Now we have a pre-acquisition loss of $2,000 and a post-acquisition profit of $10,000 giving a net result for the year of a profit of $8,000
Does that do it for you?
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