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Consolidation of Financial Statements

This topic has 1 reply, 2 voices, and was last updated 3 weeks ago by John Moffat.

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July 27, 2025 at 8:28 pm #718573
FarhadKamalzada
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When parent company acquires subsidiary company for $500,000 and the value of subsidiary is $300,000. How do you record this transaction in the individual accounts and financial statements of the subsidiary company? What happens to the $500,000 cash? Does the subsidiary company utilise it or the shareholders of subsidiary company takes it?
July 28, 2025 at 8:48 am #718578
John Moffat
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Given that here they are obviously not buying the shares on the incorporation of the subsidiary they are buying them from the previous shareholders and it is to them that the cash will go.
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