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Hi, can anybody tell me the concept for adjustment of intra company accts in consolidation and how to deal with the loans taken over, when is the loan taken over by the parent from the subsidiary added to the cost of investment
answering your second question first, when the parent pays a premium to buy the loan stock. If parent buys at par, the only thing that you need concern yourself with is the cancellation of the parent’s asset – probably included in the parent’s “cost of investment” figure – against part of the long term debt shown in the subsidiary’s records
Dealing with intra-group transactions? cancel in revenue and in cost of sales the gross value of the intra-group trade.
Now, calculate if there is any pup in the closing inventory. Use that pup figure to INCREASE cost of sales
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