Our company is forming an ordinary partnership in which there is one other partner, the share of profits is set up 99.9% Ltd company 0.01% other partner.
I was of the understanding that at year end I would consolidate the ordinary partnership balance sheet and p&l into the LTD companies accounts as the partnership represents a subsidiary. In line with FRS 102 standards.
However my auditors have suggested that the LtD company could bring in 99.9% of the partnership accounting profit into the P&L and show a corresponding investment on the balance sheet. I believe using standard in FRS relating to investments in subsidiaries.
What is the correct accounting approach? If it is what the auditors have suggested why would I not consolidate on a line by line basis.