Holding Company (Company A) paid for the incorporation fee at the time of setting up Wholly Owned Subsidiary (Company B). The shares capital for subsidiary is $2 only. I have made up the double entry for the above scenario and wonder it is applicable? Doing so the Parent book Amount owing from related company (1060.60) is not tallied with Amount due to Holding Company (1058.60). Seeking helps!
Parent Book
Dr Amount owing from related Company 1,060.60
Cr Incorporation Fees 1,060.60 (inclusive of $2 share capital)
Subsidiary book
Journal 1
Dr. Filing & Registration (Expenses) 1,060.60
Cr. Amount Due to Holding Companies 1,060.60
Journal 2
Dr. Amount due to holding Companies2
Cr. Share Capital 2.00
Greatly appreciate for your kind feedbacks!
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Replies (2)
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In parent have you considered the investment in the sub in the parent company's accounts?
Who pays that much to set up a company?
You also may have strayed across the Atlantic.
In the parent you don't debit the subsidiary with the price paid for its shares - you debit the investment account in the parent's balance sheet.