Accounting for pre-acquisition retained earnings losses

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August 31, 2021 at 10:35 am #633640
Kbrown88
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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
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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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