LM acquired 80% of the equity shares of ST when ST’s retained earnings were $50 million.

LM acquired 80% of the equity shares of ST when ST’s retained earnings were $50 million.

The fair value of the net assets of ST included a contingent liability with a fair value of $100 million at the date of acquisition and a fair value of $40 million at 31 December 20X6.

No other fair value adjustments were required at the date of acquisition.

LM and ST had retained earnings of $200 million and $80 million respectively at 31 December 20X6.

The consolidated retained earnings of LM at 31 December 20X6 were:
A . $164 million
B . $176 million
C . $272 million
D . $284 million

View Answer

Answer: C