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- This topic has 2 replies, 2 voices, and was last updated 3 years ago by John Moffat.
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- June 25, 2020 at 6:25 pm #574698
Really acquired 75% of the ordinary share capital of hard on 1 january 20×9 when hard had retained losses of 112,000. Also on that date, Really acquired 30% of the ordinary share capital of Work when Work had retained earnings of 280,000.
Retained earning at the year end are given below:
Really = 2464000
Hard = 1204000What is the amount for retained earnings to be included in the consolidated statement of financial position?
My Calculation is given below:
My Formula:
Hard post retained earning = retained earning at acquisition date – retained earning at reporting date.So question given me retained losses (negative amount) at acquisition date and retained earning (positive amount) at reporting date.
I just put these value in the formula given above.
Hard Post R.E = – 112000 – 1204000 = 1316000
Working for Group’s Retained Earning:
Share of Hard’s Post R.E (1316000 x 75%) = 1015000
Plus: Really Retained Earning = 2464000
Total = 1015000 + 2464000 = 3479000But my answer is wrong.
In kaplan kit they solve this question by taking hard’s retained losses at acquisition date as a positive figure i.e 112,000. Rest all calculation are same.
I don’t know why they take Retained losses as a positive figure i.e 112,000 instead of taking as a negative figure i.e -112,000?
I need your help in this question.
Thanks!June 25, 2020 at 6:29 pm #574699Sorry i had made a mistake in my calculation. Thank you anyway!
June 26, 2020 at 9:19 am #574722No problem – I am pleased that you have sorted it out 🙂
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