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Dear Sir
I hope this message finds you well
I was wondering about the Subsidiary’s books when it comes to ordinary share sale that leads to the Parent-Subsidiary relationship.
for instance
A buys 90000 $1 ordinary shares (of the available 100000, which leads to Parent-Sub as 90% ownership), paying $270000
Is there a difference in the treatment of such an issue when it comes to the financial statements for the subsidiary or is such an issue still treated as :Dr Cash
Cr Ordinary Share capital
Cr Share PremiumI appreciate that the parent recognises the purchase from the perspective of its own books and the goodwill on acquisition (after taking retained earnings, share capital and adjustments to fair value of Non-current assets into account), but what about the Subsidiary?
regardsThe entries are exactly as normal – just as you have written.
Remember there are only ever two separate companies. The consolidated accounts are not because there is a third company 🙂
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