What is the consolidated accounting loss on the liquidation of a subsidiary?

Question

Assuming subsidiary has:
share capital $1,000 (100% owned by parent)
loan to parent $2,000
retained losses $3,000
Company goes through formal liquidation with loan still outstanding (no debt forgiveness beforehand). What happens about capital on liquidation?
Is the loss in the parent just the write-off of its shares in , and loan to subsidiary?
I can't seem to get my head around this one so any help much appreciated!!

Answer 1

The parent company will write off the loss upon liquidation of its subsid. only in its own accounts, not in the consolidated a/cs cos the loss washes out on consolidation. To calculate the loss, you take the investment in subsid, add the loans TO subsid, less loans FROM subsid, less whatever payouts received from the liquidator. That will be the total, net, loss.

Answer 2

Accounting For Dissolution Of Subsidiary

Answer 3

We suggest that you recheck the question.

In consolidated accounting, all inter-company transactions are eliminated. Accordingly, on the liquidation of a subsidiary, there are no losses which are reported in the consolidated financials.

Please re-post.

Hope this helps.