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in this case they are saying abnormal loss of RS.1lakh has occurred on 1/7/18.Whereas the DOA is 30/9/2018.So then why here we are adding abnormal loss of 1lakh in post acquisition instead of pre acquisition? Video Details ------------- P1 - Advanced Accounting - Without AS Consolidated Financial Statements #19. Revaluation: Example - 2
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Niveta Rajkumarsir like why do we add the abnormal loss 1 lakh in post acquisition to find normal profits?
Say for e.g the subsidiary earned profit of Rs. 5,00,000 in calendar year 2024 (Jan-Dec) They also made an abnormal gain of Rs. 50,000 in November 2024. Parent acquired Subsidiary on 1st July 2024. The 50,000 of abnormal gain pertains to post acquisition period only. If we ignore abnormal gain and divide the total profits by 2, we get 250,000 as pre acquisition and 2,50,000 as post acquisition. However, the actual scenario is that normal profits are 4,50,000 for full year. So pre acquisition is 2,25,000 Post acquisition is 2,25,000 Adding abnormal profit of 50,000 to post acquisition we get Post acquisition profits as 275000 Total is 225000 + 275000 = 5,00,000 Hope it is clear now.
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