Consolidation of accounts

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 November 2015 Hi,

A query regarding consolidation of accounts.

If the holding company has provided 100% provision for investment in subsidiary but in the books of subsidiary company, it has not provided for any losses, i.e; its share capital is still continuing. On consolidation of their accounts, how do we eliminate the investment against share capital.

Kindly advice.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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19 November 2015
Eliminate the investment and provision in holding books and share capital & p&l debit (loss) balance in subsidiary books

Querist : Anonymous

Querist : Anonymous (Querist)

25 November 2015 Dear Sir, Thanks for the Reply.

Can you further elaborate on the same with an example.

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CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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25 November 2015 Suppose subsidiary company has the Share capital Rs.100 and accumulated loss Rs.100

Capital Rs.100 under liability & accumulated loss Rs.100 under assets

In Holding company Investment is subsidiary Rs.100 under assets and Provision for Investment Rs.100 under liability so you can eliminate as follows

Share capital in Subsidiary Rs.100 & Investment in shares in holding Rs.100

Accumulated Loss balance Rs.100 in Subsidiary and Provision for Investment Rs.100 in Holding company