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On page 477 of FR study text test your understanding 3 there is an error i think. I just need to confirm if anyone can.
So i the question the retained earning is different then, when i see the solution the retained earning under the calculation of net asset of subsidiary is different.
In the question Retained earning on 1st april 20×6 was 380 and on reporting date it was 400. But in the solution they have used 880 and 780 as at acquisition and reporting date RE. Plz someone explain.The only figure incorrect is the $880,000 presented in ‘Acquisition’ column. It must be a typo. The correct figure is $380,000 at 1 April. However, no mistakes done in totaling as the total is correct at $925,000 (500+125+380-80).
The post-acquisition profit is $400,000. It means that the total retained earnings at the reporting date must be $780,000 (380+400), which is correctly presented.
Hope it answers your query.
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