I am currently preparing year end accounts for a parent company who acquired a subsidiary share capital for around £400k during the year. In addition to the £400k paid out plus stamp duty and legals the parent company also paid out a 'cash consideration' of the bank balances plus debtors less all identifiable creditors including trade, PAYE & VAT corporation tax and accruals to the vendor of the subsidiary at the completion date of around £80k.
What figure should be going into share asset investment of the parent company for the subsidiary acquisition. I presumed it was the £400k paid for the shares with the cash consideration being shown as intercompany loan account. The parent company took possession of the bank balances and collected in the completion date debtors and paid out completion date creditors as they fell due.
I presume legal costs and stamp duty should be capitalised as well with the share capital value above.
Conversely please advise what the accounting treatment would be for the subsidiary company also.
All help gratefully appreciated.