Get Through Guide F7 - Test Yourself 11

[micmarton]

Get through Guide F7 - Test Yourself 11

Chapter Preparation of Consolidated Financial Statements - D3

The topic in the text is URP on sale of non-current assets

Can someone explain the Consolidated Retained Earnings calculation? It involves pre and post acquisition.

Thanks

[AnitaP]

To calculate the retained earnings, we need to calculate the pre-aquisition earnings of the subsidiary, which are to be deducted. Then the inter-company transactions need to be considered, and any unrealised profit on sale of non current assets is deducted.

Then, after adjusting for additional depreciation, we need to add proportionate share of the earnings of the subsidiary to the parent company, to arrive at the consolidated retained earnings figure.

Hope this helps,
AnitaP.

[Suze]

Don't forget to add 100% of parent's profit for the current year and 100% of the retained earnings B/F