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investment

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › investment

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
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  • January 15, 2019 at 2:22 am #501945
    khanumishq
    Member
    • Topics: 46
    • Replies: 21
    • ☆☆

    Hello sir, why do we cancel out the investment in the subsidiary while preparing the consolidated financial statements?

    January 20, 2019 at 8:21 pm #502827
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7231
    • ☆☆☆☆☆

    Hi,

    The investment in the subsidiary is replaced with the assets/liabilities of the subsidiary 100% on a line by line basis. If we do not eliminate the investment then it is effectively double counting the investment as it is now represented by the net assets of the subsidiary.

    Thanks

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