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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Holding company
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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.
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.
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.
No entry will be passed in holding company books.Only presntation will be changed & no of shares will be increased.
in the books of subsidiary following entry will be passed
reserves and surplus a/c dr
TO bonus share capital a/c
Thanks, But what enrty will the subsidiary comapny pass in its books?
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