- This topic has 1 reply, 2 voices, and was last updated 8 years ago by
.
- Posts
Hi Mr John..
In the first video of this topic, you showed the example in which one company buys another company 100% but with paying extra for retained earnings..But you’re saying in group accounts after a year, only the amount earned during the year in retained earning belongs to parent company not the one it bought…
The question is where the earning gone it bought at first? Of course parent company is eligible to receive the dividend from that retained earnings when the directors decide so…
The parent company owns its share of all the earnings earned since the date of acquisition.
Any earnings earned before acquisition are part of what the parent company paid for (and therefore appear in the calculation of goodwill). If the shares were bought on incorporation then, of course, there were no retained earnings at the date of purchase.
- You must be logged in to reply to this topic.