Cash transfered into subsidiary's bank account accounted for as investment

[mehranmichail]

Hi, a very strange case here. A parent company transfered money into bank account of its subsidiary and the purpose was told to be as investment and treated as such in accounts of parent. No other details are given like shape of return to parent.
In IFRS 9 , debt and equity are given as the two major types/options of being classified as investment. In my opinion, it can't be classified as investment by parent. Or substance over form applied and treated as loan. Any help.

[Marek Muc]

If you were told to treat it as an investment in subsidiary- why do you think it's wrong? It will be the easiest way to approach it, as investments in subsidiaries can be carried at cost under IAS 27

[mehranmichail]

Thanks for guidance. Actually have not come across a case where cash had to be treated as investment. As per my understanding, I thought only equity or debt instruments can be classed as investment as per IFRS 9. Further, could not find definition of investment in IFRS.

[Marek Muc]

"investment" is an everyday term that can mean equity instruments

If you want to develop a proper accounting treatment, you need to know more about terms and conditions attached to this payment. If you know nothing, the easiest way is to add this amount to the cost of shareholding and account for it at cost under IAS 27

[mehranmichail]

Thank u so much,