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will a current account balance between the parent and subsidiary have an effect on the receivables apart from a sale made by parent to subsidiary in a consolidated statement of financial position?
question number 38 on open tuition revision mock paper(cbe)
The current account balance reduces the total receivables and reduces the total payables in the consolidated statement of financial position.
ok.thanks alot sir, but can i know what does the current account balance in this situation includes?
The current account is the money owing from one of the companies to the other company.
So one company will have it as a receivable and the other company will have it as a payable.
When we consolidate we only want to show receivables and payables outside the group, and so the current accounts disappear.
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