Hi,
I agree with the entry being passed in subsidiary, but the big
question is that how then knocking entry be passed at the time of
consolidation in case holding co. ABC does not pass any entry in its
book. Correct me if i am wrong that ABC needs to pass following entry
Dr. Investment in Y 20mn
Cr. Retained earning 20mn
I appreciate contribution from members in this regard.
thx
shakeel
--- In International_
<vscotio@...
>
> Hi,
>
> In my opinion, if the "bonus share" you are referring to is the
same
> stock dividends, read further. If not, please disregard the rest of
> this message. I don't think there is any recording problem since no
> cash or other consideration is received by the parent. In the
books of
> the subsidiary, the entry is simply a debit to Retained Earnings
and
> credit to Capital Stock (or some other similar account title). For
the
> parent company, it simply has to note that it now owns more shares
of
> the subsidiary. The value of the parent's stake in the subsidiary
is
> essentially the same before and after the stock dividend because
all
> things being equal, the net asset value of the subsidiary is still
the
> same.
>
>
>
> --- In
International_
> <hki_isb@> wrote:
> >
> > Dear Members,
> >
> > On January 01, 2006, ABC CO. (The Parent) holds Rs. 100 million
in
> > its subsidiary Y (The Subsidiary). At that particular date,
share
> > capital of Y is Rs. 100 million as well. During the year, Y
issued
> > bonus share of Rs 20 million to ABC. So at year end, the
balances
> > are as follow:
> >
> > Investment in Y: Rs. 100 million (at cost)
> >
> > Share Capital of Y: Rs. 120 million (100% owned by ABC)
> >
> > Now at Dec. 31, 2006 we can knock-off our investment of Rs. 100
> > million against share capital of our subsidiary, but what to do
with
> > Rs. 20 million which were issued during the year, as bonus
shares.
> >
> >
> > Please suggest appropriate treatment of this problem.
> >
> >
> > Regards
> >
> >
> > Taufel
> >
>
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