On 1 April 2000, X, a limited liability company, paid $120,000 for 48,000 $1 shares in Y, another limited liability
company, representing 80% of Y’s $60,000 share capital. The retained earnings of Y at that date were $70,000.

At 31 March 2005 the retained earnings of the companies were:

                                                                     $
X                                                              180,000
Y                                                              100,000
All goodwill arising has been written off because of impairment.

What figure should appear in the consolidated balance sheet of the X group at 31 March 2005 for retained
earnings?
A     $208,000
B     $8,000
C     $204,000
D     $188,000

D
180,000 + 100,000 – 56,000 – 20,000 – 16,000 = 188,000

see see