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Hi
When the parent takes the share of the Sub’s reserves, is it post acquisition reserves as a whole ? or is is the parents share of the post acquisition retained profits?
Also could you clarify the same for NCI ?
A little confused based on some examples in the text
Thanks
The parent is entitled to only their share of the subsidiary’s post acquisition retained earnings.
Similarly the nci will be credited with only their share of those post acquisition retained earnings
Ok?
Hi mike
Thanks for the reply.I find in the Kaplan text it says .. To calculate group ret earnings..
It’s
P’s retained earnings (100%)
P’s % of subs post acquisition retained earningsLess parents share of impairment.
For Nci :
Nci value at acquisition
Nci share of post acquisition reserves
Less nci share of impaSorry that post was incomplete….
So those are the workings they show as above
But in the examples and tyu’s they kinda do both as and when they wish it seems .. Lol !!Thanks for your help.
Your post identifying the bases of the calculation is correct. Don’t ask me why Kaplan varies those workings! Are you SURE that you have read it right?
Hi … Yes I’ve been through a few examples and the nci calcs are consistent .. But the parents retained profits calls are not as they sometimes take
Parents share of subs post acquisition retained profits
Or
Parents shares of post acquisition reserves ..
I’d love to show u if I could upload images !
But thanks for ur help .. !
The words “profits” / “earnings” / “reserves” are not infrequently used at random
Don’t worry about it
Retained profits for the year are sometimes called earnings and accumulated earnings more often than not are the reserves.
Sometimes a company will have reserves other than retained earnings – things like share premium account and revaluation reserve. If these have changed since date of acquisition, then parent and nci want to be credited (sometimes debited) with their respective proportions
Ok?
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