Part Cancellation in Group Accounts
An item may appear in the balance sheets of a parent company and its subsidiary, but not at the same amounts.
- The parent company may have acquired shares in the subsidiary at a price grater or less than their nominal value. The asset will appear in the parent company’s accounts at cost, while the liability will appear in the subsidiary’s accounts at nominal value.
- Even if the parent company acquired shares at nominal value, it may not have acquired all the shares of the subsidiary (so the subsidiary may be only partly owned).
• One company may have issued loan stock of which a proportion only is taken up by the other company.
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