Consolidated SOFP

Platinum Co acquired 80% of the ordinary share capital of Palladium Co on 1 April 20X0 by means of cash and contingent consideration. At this date, Platinum Co assessed the fair value of contingent consideration at $250,000.

Platinum Co calculates non-controlling interest using the fair value at the date of acquisition which was estimated to be $100,000 and the goodwill arising on acquisition was $300,000.

The following figures for Palladium Co are relevant:

$000
Ordinary shares of $1 each at acquisition 500
Retained earnings at 1 January 20X0 (300)
Profit for the year ended 31 December 20X0 120
The profits for Palladium Co have accrued evenly throughout the year.

What was the cash consideration paid by Platinum Co for the investment in Palladium Co? (Answer in $ in the Answer box)

The correct answer is $18000.

At 1 January 20X0 (300)
+ 3 months’ profit (120 × 3/12 months) 30 (230)

Normally we check the movement from retained earnings at acquisition to reporting date.

And the difference is where we compute our share of profits for Parent and NCI.

So when I was calculating, I took (300)-120. Which gave me total profit of $180,000
And from this I took 3 months of profit- Jan, feb, March.
ie, 180,000x(3/12)=45,000

And then deducted it from
180,000-45,000=135,000
So I thought this 135,000 was supposed to be the movement for profit from 1st April 20X0 to 31st Dec 20X0.

Therefore at acquisition on 1st of April, we’ll have (300,000)+45,000=255,000 retained earnings.

But in the answer section, it’s written 3/12 of $120,000= 30,000
And then we deduct it from (300,000)
Which gives us $270,000 as retained earnings at the date of acquisition

This is where I’m stuck.
Could you please guide me through this?

Thank you so much.