Investment in Another Company

Investment in Another Company

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Small company A holds 20% of the share capital of another small company B. The major shareholder and director of company A is also a director of company B and there is significant trading between the two companies.
The cost of the investment is £1. How should this investment be accounted for, valued and disclosed in the accounts of company A?
Paul

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By User deleted
06th Aug 2004 20:19

Thanks Rob.

Paul

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By mollyfatha
06th Aug 2004 13:04

Investments
The investment will be disclosed at cost in Company A (£1). As the amount held represents 20% or more it will be disclosed as an investment in a related company. Assuming you are not consolidating (as the group would be classed as either small or medium sized) you need make no reference to 'associated undertakings'.

You will also need to disclose Company B's name, country of incorporation (if outside GB), class and proportion of shares held, aggregate capital and reserves for the year and profit and loss in the period.

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