Post-Acquisition Period - Associate

[shunmas]

Hello !

In June 2010, the post-acquisition period for Adler (Associate) is 6 months. In the examiner's answer, while calculating the Group Retained Earnings, he has done this: 6000 post-acquisition profit x 40% x 6/12, which gives us 1200.

In June 2009, the post-acquisition period for Vardine (Associate) is 6 months also. In the examiner's answer, while calculating the Group Retained Earnings, he has NOT time-apportioned the post-acquisition profits.

WHY is this so ?

[rackul16]

Hi,

In June 2010, the answer is correct by taking the approtioning of the profits.
In June 2009, read the adjustment (viii),where it is specificially given that out of the profits of $100 million as at 31/03/09, $20, relates to period from 1/4/08 to 30/09/08. This means that (100 - 20) which is $80 million is post-acquisition profits and no further approtionment is required.

Hope this clears your doubt.

Rachana.
Tutor - Get Through Guides Pvt Ltd.

[shunmas]

Thanks Rachna....lovely name though...