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Accounting Entries for Group restructure

Accounting Entries for Group restructure

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Ltd company group restructure. FRS102 is applied. 

New Top Co. Set up

Top Co buys all 1000 ordinary £1 shares from shareholders in Sub Co. for £0.3m.

HMRC clearance in place.

To fund the transaction Top Co. uses external finance (loans).

What are the accounting entries in Top Co to record the transaction?

Thanks in advance

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By paul.benny
02nd Aug 2021 16:38

From the limited information given, simply
Credit cash/loan £0.3m
Debit investments £0.3m

Accounting for the loan may require additional entries, depending on the terms. See s11 FRS102.

Under FRS102, unless group is Small or satisfies one of the other exemptions, Topco must prepare consolidated accounts, so you'll need to fair value the assets and liabilities of subsid and so potentially deal with goodwill

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