- This topic has 3 replies, 2 voices, and was last updated 9 years ago by
.
- Posts
Hi Everyone
Can anyone who’s revising from BPP revision kit please explain me how is the Retained Earnings of £12,000,000 were calculated?
Is it because we deduct the 50% of the pre-aquisition loss from the RE of £14,300,00 at aquisition date?Thanks very much in advance!
Eszter
Yes, Southstar had 14,300,000 retained earnings at acquisition and had a 4,600,000 x 6/12 loss for the first six months of the year which would need to be removed from retained earnings to establish goodwill on acquisition..
Are you finding that this revision kit is very poorly constructed?
Hi Chris
Indeed very poorly constructed.
I’ve just figuredout what happened here. This question is a simplified version of the Dec 2013 exam q1 ( if you check out that question you’ll see that all numbers are the same but on the exam paper there’s also some data from the SoFP and the £12,000 for RE is given there.
I find it very often in this revision kit that important bits and pieces are missing which makes it very difficult & time consuming to work through the questions. Annoying.
Anyways, thanks very much for yout help! 🙂
Eszter
Hi Eszter,
Mock Exam 2 Question 3, they have taken Question 2 December 2013 and added a share issue of 4,000,000 and a dividend payment of 2,000,000 which leaves your equity and liabilities 2,000,000 in excess of the assets. Their arithmetic doesn’t add up but they haven’t bothered to correct (retained earnings 19,800 + 11,970 = 29,670 supposedly).
Absolutely ridiculous. Wastes our time and affects confidence.
Hope you get on okay. Good luck for the exam.
Chris
- You must be logged in to reply to this topic.