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Accounting for pre-acquisition retained earnings losses

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Accounting for pre-acquisition retained earnings losses

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  • August 31, 2021 at 10:35 am #633640
    Kbrown88
    Participant
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    Why are retained earning losses added back to subsidiary retained earnings, when calculating group retained earnings.

    September 1, 2021 at 7:21 pm #633857
    P2-D2
    Keymaster
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    Hi,

    This is because the losses will have reduced the retained earnings, so to work backwards from the reporting date retained earnings to get the retained earnings at the acquisition date, we need to add them back.

    Thanks

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