Earned Capital Consists of Contributed Capital and Retained Earnings

question 10

True/False

Earned capital consists of contributed capital and retained earnings.

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Definitions:

Consolidated Retained Earnings

The cumulative amount of profits retained in the company and its subsidiaries after dividends are paid, as shown in the consolidated financial statements.

Net Income

The amount of money a company earns after deducting all expenses and tax obligations from its revenues.

Identifiable Net Assets (INA) Method

A valuation method in mergers and acquisitions that calculates the fair value of a company's net assets, excluding goodwill.

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its net identifiable assets, representing items like brand name, good customer relations, and reputation.