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Consolidation of Financial Statements

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Consolidation of Financial Statements

  • This topic has 1 reply, 2 voices, and was last updated 8 months ago by AvatarJohn Moffat.
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  • July 27, 2025 at 8:28 pm #718573
    AvatarFarhadKamalzada
    Participant
    • Topics: 1
    • Replies: 0
    • ☆

    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
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54836
    • ☆☆☆☆☆

    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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