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Consolidated retained earnings:
Paradigms retained earnings (19,200+7400) 26,600
Stratas post acq profit(11,200*75%) 8,400
Urp in inventory (600)
Loss on equity investment
(7,500-7100). (400)Total=. 34,000
The adjusted post acq profit of strata are:
As reported for the year 8000
Add pre acq losses 2000
Gain on equity investment
(3900-3200). 700
Adjustment for over dep
On fv of plant(3000*6/12). 500Total =. 11,200
My question is this:
Why is pre acq losses of 2,000 added to the profits for the year and how is the 2000 losses calculated.
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