RETAINED EARNINGS

? 330 Paradigm Co (Dec 2011 amended) On 1 October 20X2, Paradigm Co acquired 75% of Strata Co's equity shares by means of a share exchange of two new shares in Paradigm Co for every five acquired shares in Strata Co. In addition, Paradigm Co issued to the shareholders of Strata Co a $100 10% loan note for every 1,000 shares it acquired in Strata Co. Paradigm Co has not recorded any of the purchase consideration, although it does have other 10% loan notes already in issue. ANSWER ? 4 Retained earnings Per draft Paradigm Co Strata Co $'000 $'000 26,600 4,000 Add back pre-acquisition loss 6,000 10,000 PURP (W2) (600) Gain (loss) on equity investments* (400) 700 Movement on fair value adjustment (W6) 500 11,200 Group share of Strata Co -75% x 11,200 8400 Group retained earnings 34,000 Good day,Please I don't understand why the 6 months interest on the loan note given as consideration was not removed from the group's retained earnings.I'll appreciate if you can explain better