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Sir,
I’ve difficulties in understanding the Net asset used of subsidiary used in consolidation. In a simple example , net asset at acquisition is S.Capital plus R.Earnings but why isn’t is SC + RE – current liabilities ?
Because current liabilities are an integral element of “net assets” and a fundamental accounting equation is that “Net Assets = Shareholders’ Funds”
Your question tells me that you were exempt from F3 and that you claimed that exemption
I suggest that your appreciation of basic double-entry bookkeeping would be sensibly improved by watching John’s lectures on F3 on this site
OK?
Thanks for replying to me . I got your point on this one. However , can’t net assets be calculated the other way round ? That is we add up all the Non current and current assets and subtract all liabilities?
Yes, that’s correct
So if you’re going to deduct the current liabilities from that total of all the assets, why are you trying to deduct it again from the share capital + retained earnings?
Incidentally, shareholders’ funds is more than just share capital + retained earnings. There’s also share premium account, capital redemption reserve, as well as all the other reserves that are possible elements of shareholders’ funds
OK?
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