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how to calculate subsi retained earning?
june 2013 question 1
i know pre + post acqusition profit is 10000 but in subsi retained earning why it dint minus the pre acqusition loss of 20000?
Per the question the retained earnings are 4,000 profit (loss of 4,000 + profit of 8,000).
Pre-acquisition there was a loss of 4,000 to April X2 and then a further loss of 2,000 to October (acquisition date).
Therefore post-acquisition profits are 4,000 – (-4000) – (-2000). Double negative makes a positive so post acquisition profits are 10,000.
The 2,000 pre acq loss is accounted for.
Hope this helps.