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Hi Accountants,
So there's a situation where an entity has acquired the entire share capital of another entity making it a wholly owned subsidiary. In the financial statements of the now parent company, it has recorded the full consideration paid as 'Investment in Subsidiary' under Non-current assets.
In the financial statements of the subsidiary, the share capital remains the same as it hasn't changed. The consideration was paid to the previous owners of the subsidiary entity. In order for this to net off at consolidation level, there has to be some sort of recognition of the consideration paid by the parent in the separate financial statements of the subsidiary. What is the best way to show this? Reference to standards will be highly appreciated.
So there's a situation where an entity has acquired the entire share capital of another entity making it a wholly owned subsidiary. In the financial statements of the now parent company, it has recorded the full consideration paid as 'Investment in Subsidiary' under Non-current assets.
In the financial statements of the subsidiary, the share capital remains the same as it hasn't changed. The consideration was paid to the previous owners of the subsidiary entity. In order for this to net off at consolidation level, there has to be some sort of recognition of the consideration paid by the parent in the separate financial statements of the subsidiary. What is the best way to show this? Reference to standards will be highly appreciated.