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hi guys
plz help the question says p acquire s on 30 june 2004 and financial statement is prepared on 31 aug 2004 so what will be the pre and post acq profit please explain in detailThe post acquisition profit will be for only the two months, rest will be pre acquisition. You will need to pro rate the figures of the profit of the year i.e 2/12
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The post acquisition profit will be for only the two months, rest will be pre acquisition. You will need to pro rate the figures of the profit of the year i.e 2/12
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a further discussion of this topic,
say, the Subsidiary sales goods to parents, S to P:
there will be then unrelised profit in the “retainded earnings” of S, which number should we pro rate, the retained earnnings number given in the question, or the number after the unreliased profit adjustment?- Topics: 0
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no u have to calculate the urp..and its claimed only on that inventory which is still there in the books..what is sold is sold..regarding pro rating.your reserves at acquisition will be those that the sub has on 30 june 2004 while computing goodwill.this means that whatever the question provides as reserves at the start of the year u have to add in it profit for the year into 10/12 to get to ur retained earnings at acquisition. for the post acquisition profits u have to pro rate it for 2 months..u dont have to confuse ur self here with urp..just work on the profit figures provided
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