Paper 1 - Task 6

Nataliedory

Hi, @dumutroba

Is anyone able to help with the workings for the retained earnings - Houston Ltd - Attributable to Texas PLC please? I can't seem to get the answer 32?

Thanks

daniellaengland1107

It took me ages to get my head wrapped around retained earnings for consolidated statements!

Retained earnings comprises of 100% the parent's retained earnings, plus or minus the increase or decrease of the subsidiary's retained earnings since the date of acquisition.

So...

Retained earnings of Houston Ltd at time of acquisition: 20
Retained earnings of Houston Ltd on the statements of financial position: 60

60 - 20 = 40 (this is an increase in retained earnings since date of acquisition)

% owned by Texas PLC = 80%

40 x 80% = 32

Hope that helps!

Nataliedory

@daniellaengland1107 - Thank you, just after i posted this, I finally got my head around it.