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Intra-group loan interest expenses and Retained Earnings for group consolidation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Intra-group loan interest expenses and Retained Earnings for group consolidation

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by MikeLittle.
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  • November 16, 2015 at 8:25 am #282760
    accalmz
    Member
    • Topics: 19
    • Replies: 12
    • ☆

    Dear sir,

    I came across a practice question where a parent has hold a loan to a subsidiary that has been outstanding long before the acquisition. In the provided answer, for consolidation of the group retained earnings, the expenses on an intra-group loan is not added back to the end-of-year retained earnings of the subsidiary.
    However, I think on consolidation, the interest expenses is saved and thus should be added back to the retained earnings of the subsidiary; and at the same time, the interest income of the parent should be deducted from the parent retained earnings.
    Can you please help solve my doubt? thank you!

    regards
    Lm

    November 16, 2015 at 12:13 pm #282827
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22698
    • ☆☆☆☆☆

    That sounds reasonable to me. Do you have a question reference so that I may check to see what the answer has done?

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