I'm in my first year of studying accountancy and I've just been set a little side project by my manager..
We have a holding company who has a 100% owned subsidiary. The subsidiary has a share option scheme for its employees where they pay 0.8p per share (no further payments are to be made). However, in the event of specified events, such as the sale of the subsidiary, these share options would transfer to the holding company.
Having a little trouble getting my head around what the accounting transactions would be. On the side of the subsidiary its pretty easy:
Dr cash
Cr creditor (parent co)
However, when it comes to the other side I'm having difficulties:
Dr debtor (subsidiary)
Cr....??
I want to say share capital- but as this situation would only arise in "specified events" there shares are not yet in issue... I'm guessing the sale of subsidiary is imminent otherwise I would have thought disclosure in the accounts would be sufficient.
At the moment I'm leaning towards some sort of provision for share capital- but don't even know if this is possible!
Any help/thoughts/ideas on this would be massivley appreciated!
We have a holding company who has a 100% owned subsidiary. The subsidiary has a share option scheme for its employees where they pay 0.8p per share (no further payments are to be made). However, in the event of specified events, such as the sale of the subsidiary, these share options would transfer to the holding company.
Having a little trouble getting my head around what the accounting transactions would be. On the side of the subsidiary its pretty easy:
Dr cash
Cr creditor (parent co)
However, when it comes to the other side I'm having difficulties:
Dr debtor (subsidiary)
Cr....??
I want to say share capital- but as this situation would only arise in "specified events" there shares are not yet in issue... I'm guessing the sale of subsidiary is imminent otherwise I would have thought disclosure in the accounts would be sufficient.
At the moment I'm leaning towards some sort of provision for share capital- but don't even know if this is possible!
Any help/thoughts/ideas on this would be massivley appreciated!