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Consolidated statements

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Consolidated statements

  • This topic has 0 replies, 1 voice, and was last updated 11 months ago by kelmgrogan.
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  • July 11, 2021 at 2:59 pm #627451
    kelmgrogan
    • Topics: 3
    • Replies: 4
    • ☆

    Hi Sir,

    Thanks for your lectures on this, really helpful. I have just come up against something that I don’t understand, this question;

    Really acquired 75% of the equity share capital of Hard on 1 January 2019 when Hard had retained losses of 112000

    At Y/E
    Retained Earnings of Really are 2,464,000, and Hard are 1,204,000.

    The question is what is the total amount of retained earnings to be included in the consolidated statement.

    I thought the answer would be 2,464,000 + ((1,204,000 + 112000) *0.75) because at the time of acquisition retained earnings were at a loss, so seeing as everything post acquisition should be the amount that brought the retained earnings to 0, plus everything above 0 as it currently stands.

    My answer in my book says that you should deduct the 112000 but I really don’t understand why, can you help me?

    Sorry if that’s a very basic question, I have spent a bit of time thinking about it now!

    Thanks loads,
    Kellie

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