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MINI EXERCISE 10 GOODWILL Question 2.
Hi mike,the question says; Suzanna’s retained earnings at 28 February, 2010 were $69 million and at 28 February, 2011 were $82.5 millionret. but in the answer it was, Ret ears b/fwd 69,000,000 and Ret ears 4 months 4,500,000.
my understanding is that ret. earning for 4 month should be 4/12*82.5=27.5 therefore 69m+27.5=96.5 will be figures for pre acq. ret. earg. not 69+4.5=73.5thanks
How much of that $69 million was made pre-acquisition?
Answer that for me before we go further
in the question; On 1 July, 2010, Pyotr acquired 18 million shares in Suzanna
and also Suzanna’s retained earnings at 28 February, 2010 were $69 million. thus the whole 69m is pre- acq retained earn.So why are you trying to tell me that only 4/12 of that $69 million is pre-acquisition?
my point is that there is another 82.5m ret.earning at 28 February, 2011 apart from retained earnings of 69m at 28 February, 2010.
since the acquisition date was On 1 July, 2010, then 69m at 28 feb, 2010 plus 4/12*82.5=27.5 which is 4 month time apportionment of 82.5m of 28 February, 2011.Whoa, whoa. Stop right there!
Is the retained earnings figure not a cumulative figure?
Surely what we have here is an amount of $69 million made up to 28 February, 2010 with a further amount of $13.5 million retained earnings made in the year ended 28 February, 2011
You’d better get happy with this and accept that it’s correct because it appears frequently in F7 consolidation exercises!
Is the retained earnings figure not a cumulative figure? this is the golden question that solved my difficulty to understand the logic. thanks thump up. am good to go now
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