consolidation

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CA Atul Singhal (Querist)
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16 July 2010 pls anybody solve the following technical problem:

A ltd is the 100% subsidiary of B Ltd from the date of its incorporation.

during the year new shares are issued to parent co. at premium.

what is the treatment of premium?

whether it shall set-off/ eliminate with investment.

or it shall be shown in consolidated balance sheet as share premium and goodwill is to be shown at asset side equal to the amount of share premium

Venkat Rao Marella

Venkat Rao Marella (Expert)
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16 July 2010 Atul,

In the books of subsidiary company: premium will be shown as securities premium. Thus total cash received from them will be in share capital to the extent of face value nultipled by no of shares and the amount in excess of that will be in securities premium.

In the books of parent company: the entire investment in the subsidiary will be the cost of investment in their investments group.

while consolidating:both the securities premium and the goodwill should be netted off.

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