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John Moffat.
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MEAMENO99
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Greetings tutors
May you please help with this questionOn 1 January 2019, Dickson had limited acquired 80% of Sherry‘s two million N$1 ordinary shares. At this date, Sherry had retained earnings of N$ 4 million and a revaluation surplus of N$ 2 million. Dickson Limited had retained earnings of N$ 10 million and a revaluation surplus of N$ 5 million.
The fair value of Sherry ‘s net assets at acquisition were equal to their carrying amounts with the exception of Sherry’s property which had a fair value of N$ 800 000 in excess of its carrying amount and a remaining life of 20 years.
At 31 December 2019, Dickson and Sherry both revalued their assets, Dicksons assets increased by a further N$ 2million while Sherry’s increased by N$ 500 000. At this date, Dicksons retained earnings were N$ 11 million and Sherry’s were N$ 3.5 million.
Required
What will the consolidated retained earnings be at 31 December 2019?
John Moffat
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Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers – they have answers and workings 🙂
The consolidated retained earnings are all of Dickson’s retained earnings, plus 80% of the post-acquisition retained earnings of Sherry. (The revaluations do no affect the retained earnings but affect the revaluation reserve.)
This is all explained in my free lectures on consolidations. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
MEAMENO99
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