What is the value of retained earnings that will be presented in the consolidated statement of financial position of ST as at 31 December 20X5?

ST acquired 75% of the 2 million $1 equity shares of CD on 1 January 20X3, when the retained earnings of CD were S3,550,000. CD has no other reserves.

ST paid $5,600,000 for the shares in CD and the non controlling interest was measured at its fair value of S1,400,000 at acquisition.

At 1 January 20X3, the fair value of CD’s net assets were equal to their carrying amount, with the exception of a building. This building had a fair value of $1,000,000 in excess of its carrying amount and a remaining useful life of 25 years on 1 January 20X3.

At 31 December 20X5, the retained earnings of ST and CD were $8,500,000 and $5,250,000 respectively.

What is the value of retained earnings that will be presented in the consolidated statement of financial position of ST as at 31 December 20X5?
A . $9,685,000
B . $9,775,000
C . $9,715,000
D . $10,080,000

View Answer

Answer: A