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Sir ,can you explain clearly how to deal with receivable ,payables and cash transit group financial statements . I know that we have to deduct intra group amount but I don’t understand how to apply when parent or subsidiary is seller
2) do we deduct cash consideration from investment in SFP always?If you’re analysing the financial statements of the two individual entities, you would do so without the adjustments of cancellation
If you’re analysing the group’s financial statements, then you would reduce both the receivables and the payables and then do the calculations
Cash in transit – whether you’re analysing individual entities or the group, you would still need to put through the cash in transit adjustment (Dr Cash in the receiving entity and Cr Receivables in those same records)
Question 2 – no, not always … it depends entirely on where the parent is up to in terms of recording. It’s a mistake to try to reduce everything to “rules that will always apply”
Is that enough for you?
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