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holding & subsidiary co.

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(Querist)
03 March 2011 can a holding co. bear expenses such as salary, rent etc of its subsidiary co. if no, what are the consequences if a co. does so?
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Jayashree S Iyer

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Jayashree S Iyer (Expert)
03 March 2011 The holding and subsidiary companies are two different entities. One company cannot absorb the other company's expenses. Auditors will definitely object to this.

In my opinion such expenses incurred by the holding company will be treated as a loan to the subsidiary.

Other experts please give your comments.
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