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Hello mike 🙂
I have learnt from you that when calculating cons.ret. ears , we start from per q and deduct sub’s pre acquisition earnings and so onBut while I struggle with bpp revision kit question 120, a question which relates to mid year acquisition, it starts from the given figure but it deducts proportion of profit for the year not from the proportion of retained earning..
Well, i understand that profit for the year is retained earnings but then why is it different with retained earning figures..? Does it includes any other factors in it??Imagine a time line starting at 1 January, 1996, running through to 31 December, 2016, a date of acquisition 31 August, 2016 and an accounting period that ends 30 November, each year
ALL retained earnings made up to the year end 30 November, 2015 are pre-acquisition and then the retained earnings for the period 1 December, 2015 to 31 August, 2016 are also pre-acquisition
So 100% of retained earnings brought forward and 9/12 of the retained earnings for the year ended 30 November, 2016 represent the retained earnings figure as at date of acquisition
We can tackle this ‘from the other end’ and it will still result in the same pre-acquisition figure
If we start with the retained earnings as per the question, so the figure as at 30 November, 2016, and then DEDUCT from that figure 3/12 of the retained earnings for the year ended 30 November, 2016, we get back to the figure for pre-acquisition retained earnings
Does that answer your question?
Such a quick answer! Superb??
I understood it, need to tackle with more exercises!When it comes to the real questions, apart from the lectures, it got more complicated and drives me nuts ? Thanks for you help. I will have another go!
Oh the emojis are turned out to be question marks.. Superb and two thums up haha
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