Temporal Method -- quick question

CFA Level II FRA
#1

hey all, apologies if this is an obvious question but i’m at work and don’t have my books with me, and it’s annoying me.

I get that with temporal method, ending retained earnings is a plug figure to make the balance sheet balance.

but then to work out net income, you need ending and beginning retained earnings. how do you get the beginning retained earnings figure?

thanks!!

#2

In the questions i have seen, they give you opening RE as a note.

#3

ok cool that makes sense. hope that’s the case if we get tested on this. thanks much

#4

It has to be given to you… unless you are in the first year of operations, then RE is calculated as Net Income - Dividends. Good luck!