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QuestionWhy we do not add the amount of capital share and retained earnings of the subsidiary company in the amount of parent company's share capital and retained earnings while preparing a consolidation statement?
Darron Kendrick, CPA, MADarron Kendrick is an Adjunct Professor of Accounting and Law at the University of North Georgia. He received his Masters degree in tax law from the Thomas Jefferson School of Law in 2012, and his CPA from the Alabama State Board of Public Accountancy in 1984.
Financial AdvisorThe shares are already recorded in the investment account and the earnings of the subsidiary are already recorded in the equity of the parent. The adjustments remove the double counting of these items. -
QuestionWhat if the subsidiary is cancelled?Darron Kendrick, CPA, MADarron Kendrick is an Adjunct Professor of Accounting and Law at the University of North Georgia. He received his Masters degree in tax law from the Thomas Jefferson School of Law in 2012, and his CPA from the Alabama State Board of Public Accountancy in 1984.
Financial AdvisorThis would not matter as long as it is likely that the money for the payment of the investment is reasonably expected to take place. -
QuestionHow does one treat the sale of a subsidiary in consolidated financial statements?Darron Kendrick, CPA, MADarron Kendrick is an Adjunct Professor of Accounting and Law at the University of North Georgia. He received his Masters degree in tax law from the Thomas Jefferson School of Law in 2012, and his CPA from the Alabama State Board of Public Accountancy in 1984.
Financial AdvisorThe entity sold would no longer be recorded and the gain or loss would be reported in the period sold. -
QuestionWhat if the investment in subsidiary or inter-company is not paid yet?Darron Kendrick, CPA, MADarron Kendrick is an Adjunct Professor of Accounting and Law at the University of North Georgia. He received his Masters degree in tax law from the Thomas Jefferson School of Law in 2012, and his CPA from the Alabama State Board of Public Accountancy in 1984.
Financial AdvisorIf both parties are under contract, it should not matter, as they are obligated.
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