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Hi Mike, please could you help explain how the consol RE is calculated for this q? Am having some trouble with this area.
As per ACCA’s website, RE for parent (for consol RE calc) is 26,200 + 24,000 and I don’t understand why it’s adding both YE and beginning of year figures.
RE for sub at 1 Jul 14 = 14,000 and 10,000 at YE. Answer does not involve deducting pre-acq RE like other questions I’ve practised. Is this due to the annual profit split as a percentage?
Thanks in advance 🙂
“Retained earnings – at 1 July 2014 26,200
– for year ended 30 June 2015 24,000”How is that adding both retained earnings at the beginning and at the end of the year?
“RE for sub at 1 Jul 14 = 14,000 and 10,000 at YE” – NO! Retained earnings of 10,000 are clearly identified as “for the year ended”
“Answer does not involve deducting pre-acq RE” – because the 14,000 pre-acquisition figure is not brought in to the retained earnings working so there’s no need to deduct it
I now realise the stupid reading error I’ve made here! My brain interpreted “for the year ended” to “as at year end” so I was under the misapprehension that you needed to work out pre-acq for S. Thanks very much for clearing things up for me – I definitely won’t be making this mistake again!!
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