05-02-2008, 05:01 PM
Concept # 1-
Is correct no need to make further corrections.
For example a company "ABC" is a parent company and "XYZ" is its subsidiary, ABC's Accounts Receivables showing $2,000 receivable from Subsidiary and XYZ's accounts are showing $1,500 Payable to Parent, further inspections revealed that subsidiary made a payment of $500 to parent and it has already reduced its accounts payables by $500 but the payment is still in transit.
The underlying conept is that it will reached to parent and the parent will then make the entry.
DRCASH=====X
CRReceivable==X
so, at the time of prepration of Consolidated Financial Statements the above adjusting entry need to be recorded and the remaining inter company balances need to be knocked of i.e. $1,500 need to be deducted from Consolidated Accounts Payables and Receivables
and if there are other outstanding amounts owed by subsidiary to parent the these inter-company balances should be knocked off.
Concept # 2-
Is same and it is also correct.
Regards,
Muhammad Amir
Is correct no need to make further corrections.
For example a company "ABC" is a parent company and "XYZ" is its subsidiary, ABC's Accounts Receivables showing $2,000 receivable from Subsidiary and XYZ's accounts are showing $1,500 Payable to Parent, further inspections revealed that subsidiary made a payment of $500 to parent and it has already reduced its accounts payables by $500 but the payment is still in transit.
The underlying conept is that it will reached to parent and the parent will then make the entry.
DRCASH=====X
CRReceivable==X
so, at the time of prepration of Consolidated Financial Statements the above adjusting entry need to be recorded and the remaining inter company balances need to be knocked of i.e. $1,500 need to be deducted from Consolidated Accounts Payables and Receivables
and if there are other outstanding amounts owed by subsidiary to parent the these inter-company balances should be knocked off.
Concept # 2-
Is same and it is also correct.
Regards,
Muhammad Amir
