Investment in Subsidiaries

Code: 1255
👁 Views: 114

Account Information

Financial Statement Statement of Financial Position
Normal Balance Debit

Definition

Value of investment in subsidiary companies controlled by the company

Common Journal Entries

Purchase investment in subsidiary

Dr. Investment in Subsidiaries
Cr. Bank Account

Receive dividends from subsidiary

Dr. Bank Account
Cr. Investment Income

Impairment of subsidiary investment

Dr. Impairment Loss
Cr. Investment in Subsidiaries

Partial disposal of subsidiary

Dr. Bank Account
Cr. Investment in Subsidiaries
Cr. Gain on Investments Sale

Purchase investment in subsidiary

Dr. Investment in Subsidiaries
Cr. Bank Account

Receive dividends from subsidiary

Dr. Bank Account
Cr. Investment Income

Impairment of subsidiary investment

Dr. Impairment Loss
Cr. Investment in Subsidiaries

Partial disposal of subsidiary

Dr. Bank Account
Cr. Investment in Subsidiaries
Cr. Gain on Investments Sale

📐 IFRS vs US GAAP Accounting Treatment

IFRS IFRS 10 Consolidated Financial Statements
US GAAP ASC 810 Consolidation
⚠️ Key Difference Between IFRS and US GAAP

GAAP has additional VIE consolidation model not in IFRS

❓ Frequently Asked Questions

Q: What are investments in subsidiaries?

A: Investments in companies controlled by the parent (more than 50% voting rights), with consolidated financial statements.

Q: Are investments in subsidiaries measured at fair value in separate financial statements?

A: They may be measured at cost, fair value, or using the equity method in separate financial statements.