How is the consolidated ending retained earnings balance calculated?
A)Add together the ending retained earnings of all the affiliated companies.
B)Add the beginning consolidated retained earnings to consolidated net income and subtract the parent company's dividends declared.
C)Adjust the parent company's opening retained earnings for the subsidiary's profits and dividends.
D)Adjust the parent company's ending retained earnings for the subsidiary's profits and dividends.

Question

Quizplus · Accepted Answer

The consolidated ending retained earnings balance is calculated by adding the beginning consolidated retained earnings to consolidated net income and subtracting the parent company's dividends declared. This takes into account the profits and dividends of all the affiliated companies and provides a comprehensive view of the overall retained earnings balance for the consolidated entity. Option A is incorrect as it only considers the ending retained earnings of the affiliated companies, but does not take into account the parent company's retained earnings. Option C is incorrect as it considers the opening retained earnings only for the parent company, and does not take into account the subsidiary's profits and dividends. Option D is incorrect as it considers the ending retained earnings only for the parent company, and does not take into account the subsidiary's profits and dividends.

How Is the Consolidated Ending Retained Earnings Balance Calculated