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Sir i have a Question
We are making Consolidated Financial statement for business.
The Owner Invested the Cash from Shop 1 to Shop 2, even amount is transfered into other Shop, but we are making Consolidated Statement of Both Shops
Please tell me how to deal with this ???
Regards
This is not clear from your question but it looks like a simple enough consolidation (assuming that both shops are limited entities)
If they are simply corner shops, there are no consolidation implications
If the owner personally invested in shop (entity) 2 by buying the shares in entity 2 and already personally holds the majority of the shares in shop (entity) 1, then again there are no consolidation implications
IF shop (entity) 1 acquired the shares in shop (entity) 2, then we have a consolidation – but it’s just a normal consolidation exercise
Sir, the owner has Already 100% ownership of Both the shop
what he just did, he Took the “Cash in Hand” from Shop 1 , and added it into Shop 2.
So the Capital of Shop 2 Increased Right?
But we are using one Profit&loss and Balance Sheet for both of the Businesses,
Now my Question is this, what will be the Entry if “Cash in Hand” is Reducing of “Shop 1” and “Capital” is increasing of “Shop 2”?
The main issue here is … are these shops limited entities? When you say “shop” is it actually a shop or is it a company, and entity?
Do they have a separate legal identity and do they have share capital
Tell me that first and we can go from there
yes sir, these shops are seperate legat entities and they have no share capital,
Both of the shops are small businesses
“these shops are seperate legat entities and they have no share capital”
“also its not a limited company, the own is responsibe for its everything”
These two statements are non-compatible
How can they be separate legal entities if they are not companies, they have no share capital and the owner is responsible for everything?
For a business / shop to be classed as a separate legal entity, it must be a company
If your shops are not companies / entities then this is simply a matter of the owner taking cash from shop1 (drawings) and putting it into shop 2 (proprietor’s capital introduced)
The owner should prepare financial statements for his / her own benefit (they will assist in better management of the separate businesses) and a combined set of financial statements (to support the profits that (s)he is reporting to the taxman)
There are no consolidation implications that I can see from the information that you have given me
This is more like an F3 exercise than F7
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