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Hello tutor,
For question 8, please help me understand how you arrived at the 11.5 retained earnings at acquisitionMy calculation is giving me 152m+0.5 (21m)=10.5
2. What is the treatment for the last line that says ….immediately after acquisition p invested $50m in a 8% loan note issued by S
In arriving at $21,000 profit for the year, $2,000 loan interest has been deducted
But that loan interest relates ONLY to the post-acquisition period
So add it back, divide by 2, then deduct the $2,000 from the second half’s share
You second question is the key to the answer to your first question
Is it any clearer now?
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