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hi mike
in pass paper december 2014 question 3 the retain earnings why we subtract and used the 9mths post instead of 3mths pre then in the retain earnings we add and used the 9mths post
sorry
the good will profit they subtract and used the 9mths post instead of 3mths preThis is simply a different way of arriving at the retained earnings as at date of acquisition
I NEVER do it this way – I always show retained earnings brought forward and then add on the 3 months pre-acquisition from this year
The way that it is shown in the answer is equally acceptable
Here they show the retained earnings as at reporting date and then deduct the post-acquisition 9 months’ profits
If they take out those 9 months, they are then left with the 3 months pre-acquisition + the pre-acquisition brought forwards
Personally, I don’t like it but that’s maybe because I’ve never done it that way (I sound like a child when being faced with a food never before tasted … “I don’t like it – I’ve never had it”)
OK?
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