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Sir I do not understand how associate investment and their profit affect the Consolidated finacial statement??? Pls help me
The amount of the investment is increased by the groups share of the post-acquisition profit, and the retained earnings of the group are increased by the same amount.
We calculate the groups share of the associates post-acquisition profit.
In the consolidated SOFP, the investment in the associate appears at cost plus the share of profit calculated.
Retained earnings are calculated as normal and we then add to it the share of the associates profit that has been calculated.This is explained in the lectures and notes (and as you will also be aware you cannot be asked numbers questions about associates).
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