UK Elimination of inter-company sub-contractor

[Henry@Ars2004]

Hi,

The advance payment will made by subsidiary to its staff. (Cr Subsidiary bank A/C , Dr Advance-staff)

Then when the staff bring its member to carry out the contract at Holding Co. , he may occur the related expenses and he use
the advance money to pay all his related expenses. (Cr Advance-staff, Dr sub-contractor (Holding Co.)

However, the project not yet final, and may be subject to finalised in next financial year end.
Thus, no entry being made in Holding company individual account.

So, is it the Holding Co. individual account need to take into account the differences? As client may take into account the difference in next financial year
and we may not know what the exact amount is after contra with some expenses which is paid by the Holding company.

Thanks.

 

[Shcoll]

Hi,

The advance payment will made by subsidiary to its staff. (Cr Subsidiary bank A/C , Dr Advance-staff)

Then when the staff bring its member to carry out the contract at Holding Co. , he may occur the related expenses and he use
the advance money to pay all his related expenses. (Cr Advance-staff, Dr sub-contractor (Holding Co.)

However, the project not yet final, and may be subject to finalised in next financial year end.
Thus, no entry being made in Holding company individual account.

So, is it the Holding Co. individual account need to take into account the differences? As client may take into account the difference in next financial year
and we may not know what the exact amount is after contra with some expenses which is paid by the Holding company.

Thanks.

The way I understand it Subsidiary has incurred cost which has not reach the parent company books yet and we want to suggest how the parent and subsidiary should record the transaction.

Debit Advances to Parent company A/R
Credit Subcontractor (Holding Company)

Document all payments and bill the Parent Company.

The parent company will debit Work In Progress Account, and Credit Subsidiary A/P

When the Parent Company paid, debit cash and credit A/R Parent

The Parent Company will debit Subsidiary A)P and credit cash.

When the Parent project is finished, work in progress account will be credited and Finished project will be debited.