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account of holding company
why share acquired of subsidiary company not shown in consolidated balance sheet of holding company under share holders fund?
Replies (2)
while preparation of consolidated financial statements, instead of investment in subsidiary company shares- holding company incorporate the subsidiary company assets and liabilities.
financial statement of subsidiary company
| Equity and Liabilities | Amount | Assets | Amount |
| Equity share capital | 500 | Assets | 1000 |
| Liabilites | 500 | ||
| 1000 | 1000 |
if holding company invested 80% of shares in subsidiary company for Rs.400/-
net asset in subsidiary company is 500.
i.e. 80% of share is relevant to holding company and balance 20% shares is outers. (minority share holders)
Holding company balance sheet - before consolidation
| Equity and Liabilities | Amount | Assets | Amount |
| Investments in subsidiary co | |||
| (80% shares) | 400 | ||
| 400 |
Consolidated financial statements - after consolidation
| Equity and Liabilities | Amount | Assets | Amount |
| Minority share | 100 | Assets | 1000 |
| Liabilites | 500 | ||
| 600 | 1000 |
after consolidation - verify the difference of assets and lliabilities- i.e. investment in subsidiary company .
Because investment is equal to net assets acquired and any goodwill or capital reserves.... We incorporate their net assets thats why investment is not shown and for balance portion minority shareholders is there in net assets
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