Subsidiary costs


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A subsidiary is paying for the parents paye tax. How would i account for that? initially i have thought would debit the tax authority and credit bank. But this does not reflect the full situation. As the subsidiary is paying tax for its employees plus the parents employees. How can this be reflected accurately in the books.
 
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bklynboy

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The portion related to parent is an intercompany receivable and parent has intercompany payable offset to expense on their books. Gets eliminated when you consolidate.
 
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Thank you for the help. Still trying to get my head around practical accounting nothing like university.
 

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