Investment in Subsidiaries

Code: 1255
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Account Information

Account Type Statement of Financial Position
Normal Balance Debit

Definition

Value of investment in subsidiary companies controlled by the company

Common Journal Entries

Purchase investment in subsidiary

Dr. Investment in Subsidiaries
Cr. Bank Account

Receive dividends from subsidiary

Dr. Bank Account
Cr. Investment Income

Impairment of subsidiary investment

Dr. Impairment Loss
Cr. Investment in Subsidiaries

Partial disposal of subsidiary

Dr. Bank Account
Cr. Investment in Subsidiaries
Cr. Gain on Investments Sale

Purchase investment in subsidiary

Dr. Investment in Subsidiaries
Cr. Bank Account

Receive dividends from subsidiary

Dr. Bank Account
Cr. Investment Income

Impairment of subsidiary investment

Dr. Impairment Loss
Cr. Investment in Subsidiaries

Partial disposal of subsidiary

Dr. Bank Account
Cr. Investment in Subsidiaries
Cr. Gain on Investments Sale

International Accounting Standards

IFRS IFRS 10 Consolidated Financial Statements

Control-based consolidation. Control exists with power, exposure to returns, and ability to use power.

US GAAP ASC 810 Consolidation

Variable interest entity (VIE) model in addition to voting interest model.

⚠ Key Difference: IFRS vs GAAP

GAAP has additional VIE consolidation model not in IFRS