Pre-acquisition losses in subsidiary company, Financial Accounting

Pre-acquisition losses in subsidiary company on date of acquisition

If the subsidiary company has a loss on the date of acquisition i.e. a debit balance in the retained profits (profit and loss) account, then in computing good will, the entry to cost of control of profit and loss on acquisition will be reversed as follows.

     DR. Cost of control
            CR. Group retained profits
(With the holding company’s share of the loss)

Posted Date: 12/12/2012 3:13:02 AM | Location : United States

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