Revenue booking

CA Neha Agrawal (CA) (825 Points)

22 April 2018  

A private limited company is into EPC business. It has 100% subsidiary company which is special purpose vehicle for a particular segment of customers. Agreement with client is signed by subsidiary company. This subsidiary company wants to sub contract EPC to its parent company. 

Now can the parent company record revenue in its books for the value of EPC sub contracted to it from subsidiary company? If yes then similar EPC value will be expense for subsidiary company. 

Please confirm if revenue can be recorded in this manner.