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  • Mar 5, 2010, 07:33 PM
    rosine
    Stock investment in subsidiary company balance sheet
    Under which section in the balance sheet should I report stock investment in subsidiary company?
  • Mar 8, 2010, 06:46 AM
    rehmanvohra

    Try and analyze the transaction. You have said that it is a subsidiary meaning your company holds more that 51 % of equity.

    Now the question arises about the status of investment. Is it for a long term or your company intends to sell it in the next accounting period?

    You must always analyze the transaction by trying to associate it with the recognition principle.

    1. The balance sheet element of the transaction - asset, liability or equity
    2. Is it as a result of past events?
    3. Is the information about the transaction reliable?
    4. Is it relevant?

    Measurement of transaction
    1. What was the amount paid for at the time of acquisition
    2. Is there any contingent payment due based on future performance?

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