My company has a wholly owned subsidiary (consisting of software engineers) that is not revenue generating. This means we have to fund the sub monthly. This sub does not share our accounting software so only trial balances are entered monthly. From the parent side, how do we record the wires that are sent to the subsidiary?
USA Funding a subsidiary?
- Thread starter MichelleG
- Start date
Subs can be given funding by parent in 3 main ways:
1. Parent injects capital into sub
2. Parent makes an intercompany loan to sub
3. Parent and sub enter an operating agreement where sub charges parent for sub's services.
Since you said your sub is not revenue generating, then option 2 does not make sense for you as sub has no income to be able to repay the loan.
So let us know which option is being used in your case and then we can determine the appropriate entries.
1. Parent injects capital into sub
2. Parent makes an intercompany loan to sub
3. Parent and sub enter an operating agreement where sub charges parent for sub's services.
Since you said your sub is not revenue generating, then option 2 does not make sense for you as sub has no income to be able to repay the loan.
So let us know which option is being used in your case and then we can determine the appropriate entries.