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In the bpp kit, there is a question mentined as highveldt Co, how will the information in (ii) be accounted for and which workings will be adjusted
I’ll let you know once you attempt it first. Show me what you’ve done and I’ll then gladly let you know where you’ve gone wrong.
I think the interest payable should be added back to the retained earnings in the net assets of subsidiary working.
included in highveldt co’s investment is a loan of 60 milllion made to samson co at the date of acquisition. Interest is payable annually in arrears. samson co paid the interest due for the year on 31 march 20X5 but highveldt co did not receive this until after the year end. highveldt co has not accounted for the accrued interest from samson . samson co is the subsidiary.
What I think is that the retained earnings of the samson co has been debited so finance costs should be added back to the retained earnings in the net assets of subsidiary working because this is a transaction between the group and this cost should be removed. but why is this incorrect
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