Amazing Video, thank you so much! I have a question 🙋♂️ Retained Earnings in the consolidation is just £5,000. But, shouldn’t it be adjusted? So, shouldn’t it be the following: 100% of parents Retained earnings £5,000 Less: Parents % of Subs Post acquisition reserves (i.e. the depreciation/ amortisation charges x 80%) = £270 x 80% =£216.00 Final retained earnings in consolidation = £5000 - £216 =£4,784.00 Please correct me if i’m wrong or explain to me. Also i’d of thought the same process would occur for the NCi balance?
Hello! Thank you so much! You are on the right track except that you are mixing here the “retained earnings” and the “current year P&L” In this problem i separated the two to provide better context. The 216 is current year P&L impact and not retained earning because they are amortization from April 1 to December 31. The retained earning here is strictly the netincome earned by parent before Year X. The current year net income becomes retained earnings in Year X+1. Let me know if now clear!
Btw, in some problems they might combines retained earnings and P&L in one line in the balance sheet. In this case you are correct! However you need to also add the current P&L of the parent :)
![Felix "Unfair" | [Stray Kids : SKZ-PLAYER]](http://i.ytimg.com/vi/Oswujxm2Ag0/mqdefault.jpg)
![[Intermediate Accounting] Discussion 13 - Investments in Equity and Debt Securities](/img/1.gif)
Amazing Video, thank you so much! I have a question 🙋♂️
Retained Earnings in the consolidation is just £5,000.
But, shouldn’t it be adjusted?
So, shouldn’t it be the following:
100% of parents Retained earnings £5,000
Less: Parents % of Subs Post acquisition reserves (i.e. the depreciation/ amortisation charges x 80%) = £270 x 80% =£216.00
Final retained earnings in consolidation = £5000 - £216 =£4,784.00
Please correct me if i’m wrong or explain to me. Also i’d of thought the same process would occur for the NCi balance?
Hello! Thank you so much!
You are on the right track except that you are mixing here the “retained earnings” and the “current year P&L”
In this problem i separated the two to provide better context. The 216 is current year P&L impact and not retained earning because they are amortization from April 1 to December 31.
The retained earning here is strictly the netincome earned by parent before Year X.
The current year net income becomes retained earnings in Year X+1.
Let me know if now clear!
Btw, in some problems they might combines retained earnings and P&L in one line in the balance sheet. In this case you are correct! However you need to also add the current P&L of the parent :)