- This topic has 1 reply, 2 voices, and was last updated 11 years ago by
.
- Posts
Mr mike
When parent company invest in loan in subsidiary why the interst paid by subsidiary not deduct in w3 consolidate REBecause working W3 Consolidated Retained Earnings is calculated as:-
H’s own (that’s as per H’s own balance sheet)
+
H’s share of S post acq retained (that’s from working 3, as adjusted for matters such as pups, excess depreciation)
–
Goodwill impaired since acquisition (JOS) (that’s from working W2 Goodwill)
The point is that, when calculating retained earnings for the Consolidated Statement of Financial Position, the loan interest received by the parent from the subsidiary is part of H’s own according to H’s own records. Similarly, loan interest paid by the subsidiary is as per the subsidiary’s records.
It’s a different kettle of fish when we’re looking at preparing the consolidated statement of Income. That’s when we do have to cancel loan interest receivable from the subsidiary against loan interest payable to the parent
- You must be logged in to reply to this topic.