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Consolidation-Journal Entry for Disposal of Shares

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ACCOUNTANT

Student

552 Points Posted on 16 October 2020

What is the entry for Disposal of shares in the books of parent., It was given

Bank a/c dr

to Investment a/c

is a wrong entry., and needs to be rectified recognising profit/loss on the sale of investment

please explain why this entry is wrong and also what is the rectification entry.

Please explain

Replies (6)

Quick Summary

This discussion clarifies the correct journal entry for disposing of shares. It explains why a simple debit to Bank and credit to Investment is incorrect, as it fails to recognise profit or loss on the sale. The thread details the proper rectification entry, including considerations for listed shares where Security Transaction Tax (STT) might be debited, and how to account for the resulting profit or loss and any tax liability.

yasaswi gomes

My grammar is 💯 good I

5110 Points Posted on 16 October 2020

Debit end tax liability as well

yasaswi gomes

My grammar is 💯 good I

5110 Points Posted on 16 October 2020

Forgo mention, recognise profit or loss from disposal

ACCOUNTANT

Student

552 Points Posted on 16 October 2020

Tell me the correct journal entry rectifying the above entry or in place of the above entry.....whats wrong in the above entry....

prasad Nilugal

2353 Points Posted on 16 October 2020

Are these shares listed on stock exchange ?. if yes STT will be debited . so entry will be

Bank A/c. Dr
STT. A/c Dr
To Investment A/c. Cr
To profit & Losss A,/c Cr
(being payment received after sale of listed shares.)
Above entry will be in case of profit

If loss on sale of shares Profit and loss account will be Debited.