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Dear Sir,
Sorry to bring up this topic again, but I still have some confusion about retained earnings adjustment during a mid year acquisition.In the lecture notes, the question relating to mid year acquisition had no information post acquisition retained earnings given in the question, which then required a calculation. So is it safe to say that if both were actually given in the exam ie, the pre acquisition r/e given and the profit for the year and the closing balance were both given, we wouldn’t need to do any time apportionment?
Thanks!
No, it’s not safe to say that at all!
You won’t be given these three pieces of information
You will have the date of acquisition and only two of the three figures
1) opening retained earnings
2) retained profit for the year
3) closing retained earningsBut you won’t be given all three and you almost (underlined) certainly won’t be given retained earnings as at date of acquisition
OK?
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