CAT / FIA FFA Syllabus G. Preparing Simple Consolidated Financial Statements - Pre- and Post-Acquisition Profits - Notes ^{6 / 11}

Pre-acquisition profits are the reserves which exist in a subsidiary company at the date when it is acquired.

These are included in the goodwill calculation.

Post-acquisition profits are profits made and included in the retained earnings of the subsidiary company since acquisition.

They are included in group reserves.

Only the group share of the post-acquisition reserves of S is included in the group statement of financial position, i.e. the reserves of S which arose after acquisition by P.

N.B. Where the acquisition occurs during the financial year, it is important to calculate the value of profits at the date of acquisition using time-apportionment,