Subsidiary company formation exp paid by holding co.

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sushil (Querist)
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03 August 2010 Dear all,

our company is in the process of forming offshore subsidiary company in dubai.
we have paid Embassy fees, notery, fees for stampig from external affairs ministery for huge amt. from our company account.

Under what ledger & under what leger group this expeneses is to be accounted?

thanks in advance
Sushil.

VINOD ARORA

VINOD ARORA (Expert)
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03 August 2010 These amounts are recoverable from Subsidiary company, so should be shown as Recoverable in the accounts of Holding company. Holding company may pay on behalf of subsidiary in formation, howeverr it never becomes expense of holding company, except for few indirect administrative costs which can not be exclusively allocated to the formation of subsidiary.

Regarding amortisation in the books of subsidiary, separate procedure needs to be followed, firstly for local accounts as per local law of the country concerned and for consolidated accounts in India as per Indian GAAP.