Looking at FRS 105, 9.8(a) (Financial Instruments, Subsequent measurement, investments in subsidiaries), should I keep investment in subsidiary (small group, no consolidated accounts, both FRS 105) valued at the amount of the initial share capital paid in, ignoring any profit of the subsidiary at the year end?
E.g. if a parent founded a subsidiary for £1, and the subsidiary then achieved £100 in net profit for the year (ending on the same date as parent's year), I would expect the parent's investment in subsidiary to increase for that £100 in profit. However, reading FRS 105 9.8(a) (as 7.2 is referring to 9) it looks like I need to keep the parent's investment in subsidiary valued at £1? I must be missing something?
And another question - on the CT600, where do I enter the £100 increase in investment in subsidiary as a deduction from taxable profit(for the parent, assuming the £100 should appear on the parent's books).