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Dear Mike,
In relation to Consolidated Retained Earnings part of the example. As per the course notes Consolidated R.E. calculations are broken down into R.E b/f and R.E c/f calculations.
I don´t understand why there are two separate calculations.
Also, why the figure for dividends is not shown in Cons. Ret Earn. c/f calculation?
Thank you very much in advance.
Regards,
Isabel
I found the answer for the question I had related to dividends. I see now that what appears on P&L is the dividend expense therefore already included on the Ret. Earnings so there is no need to include them on the calculation.
However, please would you be able to clarify my question related to the presentation of the answer for two separated calculations for Consolidated Retained Earnings.
Thank you again.
Regards,
Isabel
If you were ever to be asked for a statement of changes in equity (it won’t happen at F7 in the consolidation question) then you will need the retained earnings brought forward. You’ll then add profit after tax for the year, deduct the dividend for the year and that should leave retained earnings carried forward.
This is statement of changes in its very very basic form! But that’s why we need both brought forward and carry forward. In fact, you only need one of them in order to derive the other – so long as all other relevant amounts to be included are known
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