Consolidated Entries For Liquidating Subsi

[Accountant18]

Hi all,

What should be the accounting entries if lets say subsi C is in the process of liquidation as at YE?

Holding co. owns 100% of subsi B and subsi B own 100% of subsi C.

Subsi C remaining account balances is:
Cash and bank USD 10,000
Share capital USD 100,000
Retained earnings (USD90,000)

Subsi B has investment in subsi C of USD100,000

What are the acct entries for subsi B & C and eliminating journal entries for holding co consolidated accounts?

Thanks in advance.

 

[kirby]

Sub C has to send the $10,000 cash to Sub B
Entry
DR Share Capital $100,000
CR Cash <10,000>
CR Retained Earnings <90,000>
and that closes out Sub C

Sub B receives the $10,000 cash
Entry
DR Cash $10,000
DR Loss on Investment $90,000
CR Invest in Sub C <100,000>

Sub B must have placed Sub C on the cost method of accounting for investments in subs (versus the equity method for a 100% sub) previously for the sub B investment to differ from Sub C's equity. But before you propose the entry look more closely into Sub B's books to see if they accounted for the loss in Sub C in some other account.