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Dear Sir,
Q1 is from the MCQ bank as below. released it was a bargain buy for the parents company. how to treat the goodwill while calculating the consolidated retained earning?
Q2 is from the bank as well. Should the answer be $12,000 in S.
Many thanks for your kind reply.
N
Q1: When a company acquired all the 50,000 $1 equity shares of another company for $80,000 cash, the FV of NA of the new subsidiary were valued at $85,000. Subsequent to acquisition, the subsidiary has achieved $55,000 retained earnings and the parent’s retained earnings at the date of this year’s statement of financial position was $102,000. What figure will appear in the consolidated financial statements under the heading retained earnings?
A: $157,000
Q2: Subsidiary sold $60,000 (selling price) to parent as a margin of 20%. The parent had sold none of the goods by the end of the accounting year. What is PUP?
A: ZERO in S.
I calculate the retained earnings to be $162,000
and
the Pup to be $12,000 in S
but I’m not convinced that you’ve given me all information – for example, the figures you have given me are only a single choice from the mcqs where I could usefully have seen all the options
Thank you Sir. I make sure next time giving the full question and answers.
For Q1,
Post Acq (Parent): 102,000
Post Acq (Sub): 55,000
G/w (recognised as income?) 5,000
Consolidate Ret~ Ear~ $162,000Am I right?
Thanks again.
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