Related Parties Profit Sharing

[ROTS]

Profit sharing from regional office to local entity, (MNC structure)

There's a global parent entity (Parent), there's a regional office (RO) and there's local entity (LE). all are LLC companies. RO sent CU 10 million to LE as profit sharing. LE and RO agree they don't want to issue shares against it, and that money will never be returned.

Questions: What entries will be posted in LE books?

Debit: Bank... CU 10 million (of course)
Credit: Reserve / Other Income / Payables / COGS

 

[kirby]

RO is sending cash to LE and no new shares are to be issued. So CR Paid in Capital equity account on LE books because the investment in LE has increased.