Losses of subsidiary company.

This query is : Resolved

sushil (Querist)
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18 June 2011 Dear Experts,

We have formed a 100% subsidiary co in Dubai to acquire a company in Italy.

We have done due diligence & has paid the due diligence exp from our a/c's i.e. from holding company's a/c. holding company has debited these exp.

Is this treatment is right?

Subsdiary co. will not be doing any business activity there, if subsidiary company debit this exp, then there will be loss on its financilal statment. In this case can holding company debit the losses in its book incurred by its subsidiary company during the year?

Waiting for your reply...

Thanks in advance..
Regards,
Sushil.

ABHISEK TOSNIWAL

ABHISEK TOSNIWAL (Expert)
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20 June 2011 Dear Sushil,

Expenses are required to be shown by that company which is incurring it and whose exp. they are actually. In your case since the exp. are of subsidiary co. so you need to show the exp. in its books.
Regards,