When an acquisition is made and accounted for using the purchase method, the post-acquisition retained earnings account:

Question

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Under the purchase method (now known as the acquisition method under IFRS 3 and ASC Topic 805), the post-acquisition retained earnings reflect only the retained earnings of the acquiring company. The retained earnings of the acquired company are not combined with those of the acquirer; instead, the acquisition is treated as an investment, and any effects on earnings are recorded going forward from the acquisition date.

When an Acquisition Is Made and Accounted for Using the Purchase