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Accounting treatment of Grant to subsidiary entity

A grant made by parent to subsidiary? Inter-co or not?

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I have a grant that was made by the parent to the subsidiary entity in 2018 and  it was posted as an  inter-co. transaction Both entities are not-for -profits. There was no obligation on the part of the subsidiary to pay back the funds as it was a donation. Is this the correct way of posting this as an inter-co if there was no obligation to pay back the funds? I can't see how I can clear the inter-co on both sides if there is no obligation to pay back the funds. Please help on this.

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Caroline
By accountantccole
01st Jul 2022 12:03

Dr expense, Cr interco in giver
Dr interco Cr income in the receiver
If you are sure that is what it is

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Replying to accountantccole:
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By Adeline
01st Jul 2022 22:39

How do we then clear the balance on the inter-co accounts in both subsidiary & parent co, as these are balance sheet accounts?

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By jonharris999
01st Jul 2022 17:51

On what little we have here, I have a few CT qualms.

"Both not-for-profits" ? Does that mean both registered charities?

If not...one a regd charity?

Both in CT? Only one?

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Replying to jonharris999:
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By Adeline
01st Jul 2022 22:22

Both are registered not-for profits.

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By Hugo Fair
01st Jul 2022 19:03

On joining Founders Pledge, every member makes a binding pledge to donate a portion of their personal proceeds on liquidity (exit proceeds) to charity.

It is NOT a small operation - according to their website:
TOTAL VALUE PLEDGED = $7.0 billion
FULFILLED COMMITMENTS = $773 million (since founding in 2015)
... but nor is it a charity - it is a "a London-based charitable initiative".

None of my business (and not answering OP's question) but I do wonder why such an outfit would be making a grant to a subsidiary entity?
That doesn't sound like a charitable donation (or indeed grant), so what was it?

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Replying to Hugo Fair:
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By Paul Crowley
01st Jul 2022 22:19

I suspect:
Payment from Company limited by guarantee (not registered as a charity) to another group member.
The trading company?

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Replying to Hugo Fair:
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By Adeline
01st Jul 2022 22:26

Hi

Thank you for your response. Both are registered charities, the donation made to the subsidiary was back in the day when the subsidiary did not have much operational cashflow. I just need advice on whether such a donation should be inter-co

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