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I would like to find out the following:
When the parent acquires the subsidiary and therefore the subsidiaries retained earnings being negative during acquisitions, then during consolidations why the parent add the negative figure of subsidiary negative retained earnings into its consolidated retain earnings for parent.
eg. $200.00 negative retained earning for subsidiary, which is subtracted from Subsidiary’s Share Capital.
Therefore Parent add this $200.00 into its retained earnings, during consolidations.
Hi,
It depends on what the retained earnings are at the reporting date, as you will then compare this to those at acquisition to find the post acquisition reserves.
If the negative retained earnings at acquisition have reduced then there is a positive movement in the post acquisition profits and so we would add this in to the group retained earnings.
Thanks
Chris
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