on 10-08-2007 8:42 AM
HI,
I am confused about journal in Partial Transfer.
A owns 80% of B.
A owns 10% of Z.
B owns 100% of C.
C owns 90% of Z.
And then C do the partial transfer. It transfer 20% Z to A.
The investment in C has been decrease 20.000 USD and 20%.
And Investment in A has been increase 50.000 USD and 20%.
The Journals are following :
Investment C => Z -20.000
Invesment A => Z +50.000
Gain /Loss -30.000
The question is :
Where should the system post the "Gain/Loss"? is it in Cons unit C or in cons unit A?
Thanks in advance.
Hi,
Actually, consolidation of investments is done on the posting level 30, it's a level of a consolidation group, not a particular company.
Hope this helps.
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The system treats partial transfer as a partial divestiture for the sender, and as an acquisition for the receiver. Gain/losses occur only upon divestiture, thus the cons group with company C would recognize the gain/loss.
Unless the equity in Z has changed via issuance of stock, the system would also recognize goodwill for the cons group of company A.
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system will elimate both investment in A and B, following journal be created :
A investment 50.000
C investment -20.000
C differences -30.000
usually the differences will be posted in account "Gain/Loss on Disposal", it seems that there are "Loss on Disposal" in "C".
But my accountant said , it should be a "Gain on dispossal" in C.
Which one is correct? is it a gain or is it a loss on C?
Thanks for Replying
Dan,
in the previous message, you said :
"Gain/losses occur only <b>upon divestiture,</b> thus the cons group with company C would recognize the gain/loss."
but now you said :
"The system generated gain/loss is the earnings/losses from <b>the time of first consolidation.</b> "
sorry, but i cannot understand your answers.
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