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Q2) Pyotr & Suzanna….In calculating the R.E.for the 4 mnths after the first accounting period and prior to the acquisition I did…82.5m × 4/12 = 27.5 which is nowhere near the given answer of 4.5m.
Similarly in Q3) Patricija & Sergejus…..calculated the profit as 3m × 6/12=1.5m …good. Used the same period of 6/12months to calculate the R.E since they have the same date….did not get out the given answer.
Clearly I am missing something
When calculating pre-acquisition earnings for a combination that occurs midway through a year, you have to calculate 100% of the retained earnings at the start of the year (brought forward) and then add the time apportioned retained earnings for the current year so, I’m guessing in the Pyotr and Suzanna case above, …
100% x 69m + 4/12 x 13.5m
The figures may not coincide with those in the question but the principle remains the same
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