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While booking cost for a subsidiary company

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Rakesh Suvadeep Sahoo

Financial Accountant

23 Points Posted on 08 February 2020

Dear Gurus,

I am a parent company accountant, got an invoice for my subsidiary. How can I treat this in my books of Accounts.

Like I will Dr Cost/Exp & Cr Supplier

Then I will book a Debit Note in my system like Dr. My Subsidiary & Cr Cost/Exp & also raise the debit note to my subsidiary so that he can pay me off at the end of year.

Kindly provide your valuable advice or rectify me if I am wrong. Also I am going to pay the same in my books(for information)

Replies (3)

Quick Summary

This discussion addresses how a parent company accountant should record an invoice received for a subsidiary. The proposed method involves debiting the cost/expense and crediting the supplier, followed by booking a debit note against the subsidiary. The advice suggests treating inter-company transactions like regular purchases, including claiming input credit and ensuring payment within 180 days of the invoice date, as they are distinct legal entities.

sujith kumar dasa

banglore

988 Points Posted on 09 February 2020

Since subsidiary company and holding company are two different companies under Companies act. Any transaction between two will be same as regular purchase or sale transaction.

Hence you have to book it as regular purchase availing input credit and payment for same has to be made within 180 days from invoice date.