Accounting treatment of Grant to subsidiary entity

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

Didn't find your answer?

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.

Replies (7)

Please login or register to join the discussion.

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

Thanks (2)
Replying to accountantccole:
avatar
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?

Thanks (0)
avatar
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?

Thanks (0)
Replying to jonharris999:
avatar
By Adeline
01st Jul 2022 22:22

Both are registered not-for profits.

Thanks (0)
avatar
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?

Thanks (2)
Replying to Hugo Fair:
avatar
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?

Thanks (0)
Replying to Hugo Fair:
avatar
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

Thanks (0)