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Dear Sir,I want to ask you something about mid-year acquisition.I’ll use 2 examples to show what my problem is.(A is the subsidiary)
1) If DOA at 30/03/10,A’s profit(without any adjustment) for year ended at 30/09/10, say, is $500,000, the Ret Ears in it’s Statement of Financial Position is,say,$800,000 and A got fair value of a plant in an excess of its carrying amount by $20,000(expected remaining life is 5yrs) , so what’s the pre-acquisition of Ret Ears?
2) If If DOA at 30/03/10,A’s profit(this profit is PATshown in Inc.Stat.) for year ended at 30/09/10, say, is $500,000, the Ret Ears in it’s Statement of Financial Position is,say,$800,000 and A has made profit of $20,000 by selling goods to its parent entity during the year , so what’s the pre-acquisition of Ret Ears?
So, my question is: Should the PUP in both examples ( transfer TNCA & inter-trading inventory) be deducted from profit for y/e to get Ret Ears in 6months(April1st to Oct1st), or just pup from transferingTNCA?
Does it depend on what profit the question give me to decide if pup should be deducted to get pre-acq retained earnings.
well…..i don’t know i am expressing myself correctly…but, thanks!! for your courses:)
$550,000 + $20,000 fair value adjustment
In example 2, when we’re the goods sold to the parent? Pre or post or evenly pre and post?
How much of these goods are still in parent’s inventory at the year end or at date of acquisition?
If there are NO goods from A in parent’s inventory, so no pup necessary, pre-acquisition retained earnings are $550,000 again
You talk about pup on the transfer of TNCA but there’s no transfer of TNCA in your examples?
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