Consolidated SFP ( Retained earnings )

I also had this question, if the fair value of PPE goes down. So do we charge a negetive depriciation on the difference b/w carring value and fair value in Working 2 ?

Hi, For the intra-group loan we need to record the interest in the group retained earnings as part of the parent's retained earnings, if this has not been done already. It isn't too clear in the scenario if this has or hasn't been done. If we assume it hasn't then we need to record 6 months of the interest income (8% x 10 million x 6/12), which would give 400,000 increase to the parent's retained earnings and the same amount to group retained earnings, hence option 1 is correct. The elimination of the amounts within the group are adjusted in any outstanding receivables/payables on the face of the group SFP. Any investment income and finance costs are adjusted through the group SPL. Thanks

Hi , The answer with regard to first question "intra-group loan" is shown in exam kit as option 3. It says : the loss of intrest on providing loan to subsidiary : 400,000 ( 10m * 8 % * 6/12 ) Intrest recovered ( 400,000 * 60% ) : 240,000 Loss / reduction in RE : 160,000 and its strange why it used 60% for RE as its group RE and shouldn't it include full intrest amount. to me it looks like the answer is written on effects on RE of parent ( through opportunity cost) rather than group RE. Can you clarify if its wrong answer or something i missed.