ACCA FR · Chapter 13 · Question 9 of 11
Bison Co acquired a subsidiary on 1 October. The subsidiary's profit for the year ended 31 December was $1,200,000, earned evenly. How much of that profit is included in consolidated profit for the year?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $300,000
Explanation
A subsidiary's results are included only from the date control is obtained. Profit from 1 October to 31 December = $1,200,000 x 3/12 = $300,000. The profit earned before acquisition is pre-acquisition and forms part of the net assets acquired.
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