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Holding company

Souvik Kumar Ghosh (CA Final) (1368 Points)

13 May 2011

In a problem of holding company, what entry is required to be made for bonus shares declared by the Subsidiary company on the date of preparing Consolidated Balance sheet , for which no entry has been made?

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6 Replies

Suresh Prasad (www.aubsp.com) (15630 Points)
Replied 13 May 2011

The holding company, like other holders, records no entry on issue of bonus shares by the subsidiary company - only the number of shares held is increased.

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Viren (Chartered Accountant) (137 Points)
Replied 13 May 2011

It is the transaction in the books of Subsidiary Company and The Subsidiary Company is the one who will pass the entry in its books of accounts. So Accordingly In the Boooks of Holding Co. only share Capital will be increase to that extent.

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 13 May 2011

There is no change in the cost of investment on issue of bonus shares. So, holding company will not pass any entry in the books of accounts. However, there will be change in disclosures made in notes to accounts as to change in number of shares invested in the company. Generally, the companies disclose the number of shares held in the company by way of notes to accounts.