Consolidated accounting statements to make up for the loss of subsidiaries accounting entries

Regardless of whether the parent company or the subsidiary, it must be allocated according to the net profit of its own accounting statements, and cannot be allocated according to the consolidated net profit of the consolidated statements.

1. Accounting treatment under the new standard.

There is no need to make any accounting entries.

According to the new accounting standards, investments in subsidiaries are accounted for according to the cost method. If each subsidiary is wholly owned, it is fully accounted for by the cost method and no investment income is recognized. The total profit of subsidiaries is:

The "net profit after the consolidation of the statements is 8 million yuan" indicates that the parent company has no profits, and the parent company is not allowed to distribute profits according to the principle of "no profit and no separation" in the company law.

I think your "net profit of 8 million yuan after the consolidated statement" is wrong. Before preparing the consolidated financial statements, the long-term investment of the subsidiary should be adjusted according to the equity method to increase the long-term equity investment and investment income of the parent company. However, at the time of consolidation, it is necessary to prepare offsetting entries to offset it, and the consolidated net profit after the offset is 0.

2. Accounting treatment under the old standard.

1. Parent company.

Borrow: Long-term equity investment Profit and loss adjustment: 800

Credit: Investment Income: 800

If the subsidiary does not distribute cash profits to the parent company and does not need to make tax adjustments, the net profit is 8 million yuan, and the profits can be distributed at 8 million yuan. However, under the new rules, companies are no longer required to receive the Community Chest. Since the board of directors has decided to allocate 10% of the Community Chest, it can be regarded as an arbitrary reserve.

Borrow: Profit distribution Withdrawal of statutory surplus reserve: 80 (800 10%)

Withdrawal of any surplus reserve: 160 (800 20%)

Credit: Surplus Reserve Statutory Surplus Reserve: 80

Discretionary surplus reserve: 160

If a subsidiary incurs an excess loss, the provisions of the new standard in the consolidated financial statements stipulate that the accounting treatment of the offsetting entries and entries exceeding the book value of the long-term investment is treated in two situations:

In the first case, if the subsidiary incurs an excess loss, if the articles of association or agreement stipulate that the minority shareholders are obliged to bear them, and the minority shareholders have the ability to make up for them, the balance should be offset against the minority interests on the consolidated balance sheet.

The processing at this point is:

Borrow: share capital reserve (of the parent company).

Credit: Undistributed profits.

Minority interests.

In the second case, if the subsidiary incurs excess losses, if the articles of association or agreement do not stipulate that the minority shareholders are obliged to bear them, the balance shall be offset against the owner's equity of the parent company. The profits realized by the subsidiary in subsequent periods shall be fully attributable to the owners of the parent company until they make up for the losses attributable to the minority shareholders borne by the owners' equity of the parent company.

The treatment at this point should be:

Borrow: share capital reserve (of the parent company).

Credit: Undistributed profits.

1. Adjust the cost method to the equity method.

Borrow: Long-term equity investment 800

Credit: Investment Income: 800

2. Offset the long-term equity investment with the equity projects of the subsidiary.

Borrow: share capital. Capital reserve.

Surplus reserve. Undistributed profit at the beginning of the year.

Credit: Long-term equity investment 800

3. Offset of the investment income of the parent company to the subsidiary.

Borrow: Investment income 800

Undistributed profit at the beginning of the year.

Credit: Profit distribution for the year Withdrawal of surplus reserves.

Undistributed profit at the end of the year.

There are not enough numbers to count other items.

1. The entries that offset the scattered infiltration of internal transactions are: borrow: operating income, credit: operating costs, inventory.

2. The entries for the set-off of internal claims and debts are: debit: accounts payable, credit: accounts receivable.

3. Adjust the long-term equity investment in the subsidiary to the equity method (adjustment entries), and for the share of the subsidiary's realized net profit distribution in the current period, borrow: long-term equity investment, credit: investment income (or reverse entry).

For the cash dividends or profits declared by the subsidiaries for the current period, borrow: investment spine income, credit: long-term equity investment.

For other changes in the owner's equity of the subsidiary other than net profit or loss, borrow: long-term equity investment, credit: capital reserve.

In the consolidated statements, the surplus reserve and undistributed profits of the subsidiary can be offsetThis is usually because in the process of controlling the company's investment in the subsidiary, the company has included the subsidiary's surplus reserve and undistributed profits into its own financial statements, so it needs to be offset in the consolidated statements to avoid double counting.

Specifically, when a controlling enterprise invests in a subsidiary, it usually obtains control over the subsidiary by purchasing the shares or assets of the subsidiary. In this process, if the subsidiary already has a certain amount of surplus reserve or undistributed profits, then these amounts will also be included in the financial statements of the controlling enterprise with the transfer of control. Therefore, when preparing the consolidated financial statements, it is necessary to exclude the surplus reserve and undistributed profits of the subsidiary from the consolidated financial statements to avoid double counting.

Consolidated statements of surplus reserves and undistributed profits of subsidiaries sold filial pietyThe following offsetting processes are required:

For the surplus reserve of the subsidiary, it is necessary to reduce the shareholders' equity of the controlling enterprise in the consolidated statement and increase the minority shareholders' interest in the consolidated statement to reflect the proportion of the subsidiary's surplus reserve in the consolidated statement.

For the undistributed profits of the subsidiary, this part of the amount needs to be deducted from the consolidated statements to reflect that the controlling enterprise has received the contribution of these undistributed profits in the past, and this part of the amount has been included in the financial statements of the controlling enterprise.

The offsets in the consolidated statements working papers are unrealized gains and losses or assets in intra-group transactions. For example, for the parent company's long-term equity investment in a subsidiary, it is first necessary to adjust the long-term equity investment in the subsidiary to the equity method.

In the same way, the parent company will recognize the investment income based on the adjusted net profit of the subsidiary, and similarly, the minority shareholders will also recognize the minority shareholders' profit or loss. When a subsidiary distributes profits based on the realized net profit, it will involve the withdrawal of surplus reserves, the distribution to owners, etc., which are all accounted for on the debit side of the profit distribution account (debit "profit distribution - withdrawal of surplus reserve", debit "profit distribution - dividends payable").

From the perspective of the group, the parent company does not really generate investment income, and the subsidiary does not really distribute profits externally, so it is necessary to offset the investment income recognized by the parent company with the profit distribution project of the subsidiary. When the factor company distributes profits, it is reflected on the debit side of the profit distribution, so the offsetting entries should be credited with lease losses such as "withdrawal of surplus reserves".

The above offsetting treatment reflects the relationship between the undistributed profit of the subsidiary at the beginning of the period + the income realized by the subsidiary in the current period (including the income of the parent company and the income of minority shareholders) The amount of profit distributed by the subsidiary for the current year + the undistributed profit at the end of the period, where the investment income of the parent company The net profit realized by the subsidiary in the current period The shareholding ratio of the parent company.

Hello dear, according to your question, you are provided with the following, for reference only: Subsidiary adjustment of previous year's profit and loss account in the consolidated statement: "Profit and loss adjustment of previous years" is not a statement item.

If the previous profit and loss can be adjusted, the previous year's financial statements should be reprepared, that is, the profit and loss statement of the previous year should also be re-prepared, so that "the undistributed profit at the end of the period minus the undistributed profit at the beginning of the period in the asset statement is not equal to the net profit of the current year". In the event that a subsidiary has adjusted its profit or loss in previous years (whether due to a change in accounting policy or a correction of a material error in the previous period), the comparative data of the previous period should also be retrospectively adjusted at the consolidated financial statement level.

<> long-term equity investment in order to obtain greater economic benefits, if the investee incurs excess losses, how should the accounting entries be made?

Excess loss accounting entries.

1. What we should do when the investee incurs a loss:

Borrow: Investment income.

Credit: Long-term Equity Investment – Profit and Loss Adjustment.

2. If the investee's loss exceeds the book value of the long-term equity investment, and the investor and the investee have long-term equity projects, the long-term equity projects shall be written off

Borrow: Investment income.

Credit: Long-term receivables.

3. When the long-term equity project is not sufficient to offset the loss, the investor and the investee need to bear additional obligations if there are other agreements. should be treated as a projected liability:

Borrow: Investment income.

Credit: Projected liabilities.

4. If there are still additional losses, no more accounting treatment will be carried out, and registration will be done off-the-books for future reference.

If the investee realizes a profit in the future, and the profit recovers to the book value of the long-term equity investment, it shall be treated as follows:

Borrow: Projected liabilities.

Long-term receivables.

Borrow: Long-term equity investment.

Credit: Investment income.

What is Long-Term Equity Investment?

Long-term equity investment refers to the investor's exercise of control over the investee (also known as the long-term equity investment in the holding merger, the long-term equity investment formed by the enterprise merger, or the investment in the subsidiary), the equity investment that has a significant impact, and the equity investment in its joint venture.

Long-term equity investment is an asset category, and the debit side accounts for the net profit realized by the investee under the equity method, and the share recognized by the investment unit. The lender accounts for the loss incurred by the investee, and the investment loss should be recognized by the investment unit to offset the carrying amount of the long-term equity investment.

Is the return on investment a Shicha reform?

Investment income refers to the income obtained by the enterprise from foreign investment (the loss incurred is negative), such as the dividend income obtained by the enterprise from foreign investment, the interest income of bonds, and the profit shared by joint operation with other units.

Investment income is a profit and loss account. The transaction costs paid by the enterprise when acquiring trading financial assets are included in the debit side of investment income, the investment losses incurred in trading financial assets, etc. are included in the debit side of investment income, and the investment gains are included in the credit side of investment income. Cash dividends earned during the holding of trading financial assets also need to be included in investment income.