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Accounting: Conolidation

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Problem
A Government invests and takes an equity position (20%) in Subsidiary #2 which is a newly created LLC under the Parent. Funds received by this investment are used to pay off Debt and Payables associated with Subsidiary #1 an incorporated company 100% owned by parent.

What is the Journal Entry to show the equity position taken in the new company?
What is the Journal Entry to show the transfer of cash from Subsidiary #2 to Subsidiary #1?
How is the Parent affected during these two transactions? Is there any necessary Journal Entries that must be made on the Parent Side?

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Solution Summary

The problem set deals with issues under accounting: Inter-company transactions.

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A Government invests and takes an equity position (20%) in Subsidiary #2 which is a newly created LLC under the Parent. Funds received by this investment are used to pay off Debt and Payables associated with Subsidiary #1 an incorporated company 100% owned by parent.
1. What ...

Solution provided by:
Chidi Ngene, M. Sc.
Education
  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
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