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consolidated group retained earning

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › consolidated group retained earning

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by P2-D2.
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    Posts
  • August 6, 2018 at 1:26 pm #466419
    hagun527
    Member
    • Topics: 17
    • Replies: 2
    • ☆

    hello

    “included in parent’s investment is a 10% loan of 60 million to the subsidiary at the date of acquisition, interest is payable annually in arrears, the subsidiary paid the interest dur for the year on 31 march 20×5, but parent did not receive this until after the year end, parent has not accounted for the accrued interest form subsidiary”

    my question is why when calculating the parent’s retained earning should add this interest income from the subsidiary? i think all the intra-group transaction should be deducted from the consolidated financial statement

    August 6, 2018 at 3:29 pm #466438
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7205
    • ☆☆☆☆☆

    Hi,

    This is very similar to how we’d treat cash in transit. So you would accrue for the cash interest receivable and then eliminate any outstanding intracompany balances.

    Thanks

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