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Hello there,
Strictly for SOFP, when you consolidate in Retained earnings profits from subsidiary do you consolidate it with including or excluding dividends (50 net profit, 30 after dividends).Parent (after receiving dividend of 20)
Cash +20
Retained earnings +20
So i need to add an additional 30 to include the entire profit of 50 made by subsidiarySubsidiary (prior to payment of dividend
Assets 100
Liabilities 50
Retained earnings 50Subsidiary (post payment)
Assets 80
Liabilities 50
Retained earnings 30After dividends.
Please remember that you will not be asked to do a consolidation in this exam. You will be asked to explain certain adjustments such as goodwill and exchange differences. So do not spend time trying to reconcile balance sheets – they were examined in financial reporting but not this exam.
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