Invested amount as Retained Earnings?
Options
lmb
Registered Posts: 2 New contributor 🐸
So frustrated, hope someone can help!
Parent Co. invests £1.3m. In the Subsidiary Co. it shows Share Capital £100k and Retained Earnings £1.2m.
I thought the £1.3m invested in the subs. co. would be recorded in the Share Capital?
I don't understand why it is in Retained Earnings? It was invested on 1/1/x1 and the date of the accounts is 1/1/x1
Parent Co. invests £1.3m. In the Subsidiary Co. it shows Share Capital £100k and Retained Earnings £1.2m.
I thought the £1.3m invested in the subs. co. would be recorded in the Share Capital?
I don't understand why it is in Retained Earnings? It was invested on 1/1/x1 and the date of the accounts is 1/1/x1
0
Comments
-
Did the acquired business have net assets of £1.3m (share capital of £100k + retained earnings of £1.2m) before the acquisition?
That might explain why Parent Co. paid £1.3m to buy it (from the existing shareholders)
The accounts of the acquired company would not be affected by the change of ownership
0 -
Yes it did, thank you. I thought it would have been recorded as £1.3m in the Share Capital of the acquired co. but realise the investment cancels the share capital and the pre-acquisition reserves (the retained earnings)0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 18.9K For AAT students
- 268 NEW! Qualifications 2022
- 147 General Qualifications 2022 discussion
- 9 AAT Level 2 Certificate in Accounting
- 44 AAT Level 3 Diploma in Accounting
- 65 AAT Level 4 Diploma in Professional Accounting
- 8.9K For accounting professionals
- 23 coronavirus (Covid-19)
- 274 VAT
- 92 Software
- 274 Tax
- 138 Bookkeeping
- 7.3K General accounting discussion
- 194 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 352 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 590 Job postings
- 17 Who can benefit from AAT?
- 36 Where can AAT take me?
- 44 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 65 AAT membership