Cost of Investment in consolidation SFP

they deducted the loan note transaction as it was an intra group transaction between parent and sub and so need to be cancelled out.

@shadedrose said:
I have been solving consolidated SFP and I understand that the cost of investment in Parent’s SFP is eliminated from consolidated SFP.
Where there is exchange of shares, and deferred consideration, we take it into account.

hwoever, I found a question, where:
Investments in Subsidiary = 98,000

(there are non-current liabilities: 8% loan notes in subsidiary’s SFP = $20,000)
The loan note in subsidiary’s books represent monies borrowed from Parent during the year. All for the loan interest has been accounted for.

There is no exchange of shares or deferred consideration.

Now, in the solution, investment is included in CSFP : 2,000.
Apparently, what thy did is: (98,000 – 76,000 – 20,000)

They also too 76,000 in goodwill calculation as parent holding. I did not understand from where did this 76,000 come from.

I guess 20,000 is the total amount of loan notes deducted from investment. The question is why.

Answer would be appreciated. 🙂

P.S If you think there might be some other relevant information in the question (which I doubt there is) would you please clarify exactly how to treat the investments in subsidiary in CSFP?

I had the same doubt until I read the first paragraph of the qn ( that is, before the Statement of Finan. Position). It’s mentioned there that Karl bought 60% of Susan paying $76000 cash… I was real bugged and highlighted that $76000 so that I don’t miss it later..lol!

Hi Shadedrose – I believe that Shimmer has answered your original question!