Hello Everybody!
It is my first topic, so firstly i would like once again send warm greetings
I`m trying to find in IFRS hints how to treat financial contribution (or non-financial, doesnt really matter) to subsidiary in separate FS?
I would definitely go with increasing of value of investment instead of P&L, because i understand in such way economic substance and going forward it also have sense in further consolidation.
But.. i can not find any paragraph which will lead me to that conclussion.
Anyone can help please?
I will be obliged.
Thanks in advance
Adrian
Financial contribution to subsidiary
Re: Financial contribution to subsidiary
You can account for investments in subsidiaries either at cost, in accordance with IFRS 9 or using the equity method.
https://ifrscommunity.com/knowledge-bas ... tatements/
https://ifrscommunity.com/knowledge-bas ... tatements/
Re: Financial contribution to subsidiary
Thank you.
So i understand, that such contribution is investment in subsidiary, in meaning of IAS 27.10.
At cost = will be amount of money contributed, which will increase my investment value in BS.
Am i right?
Bests
adrian
So i understand, that such contribution is investment in subsidiary, in meaning of IAS 27.10.
At cost = will be amount of money contributed, which will increase my investment value in BS.
Am i right?
Bests
adrian
Re: Financial contribution to subsidiary
yes that's the normal way. depending on local law you might contribute in exchange for new shares, or just contribute in which case the sub will have a capital contribution in equity. yes, increase cost of investment in sub, presuming you use the most common option of 'cost'.
Re: Financial contribution to subsidiary
Thank you very much!
Re: Financial contribution to subsidiary
@ JRSB, how would you consider the capital contribution in Equity, is that distributable reserves or not ?
Re: Financial contribution to subsidiary
that's a local law question. could depend on what was contributed, eg cash or a long term asset etc
Re: Financial contribution to subsidiary
By distributable you mean available for dividend payments? If so, capital contributions do not count towards that amount as they are not profits
Re: Financial contribution to subsidiary
@JRSB, what about in this particular case ?
Re: Financial contribution to subsidiary
yes agree, though that's not to say it can't be made distributable (again local law)