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Hi, just want to clarify,
for w3 retained earnings, why isn’t it like this :
J D
per q 200 30
Pre acq (30)
Post acq –
Our share – 70%why is it in the answer that the 30000 was post acquisition when it was pre acquisition?
And why do we cancel 60 receivable from Doville against 60 payable to Jurate? I am lost at this part too.
Thanks
What on earth makes you think that the $30,000 is pre-acquisition? It’s clearly post-acquisition – there’s enough clue in the question to tell you categorically that it’s not pre-acquisition! If you can’t see the clue, post again and I’ll point you in the right direction
After dealing with the in-transit items of inventory and cash, there are still intra-group balances outstanding. In Jurate there’s a receivable from Dovile and in Dovile there’s a payable to Jurate.
But, if we’re going to prepare financial statements for the group as though it were a single company, then for us not to cancel the receivable against the payable will mean that we are showing that we owe money to ourselves and that we are owed money by ourselves. Clearly this is a silly state of affairs
OK?
okay, I understand, after re-reading the notes, I think I was confused about this question with chapter 7 example 4. Okay, I am now clear with the receivable and payables too.
Thank you.
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