Question

In case of inter lending transaction between
Holding & Subsidiary..........
... will be
eliminated.​

Answer 1

Answer:

• One of the most frequent issues with financial consolidation, in the opinion of many, is tracking intercompany transactions. Transactions between two entities of the same company are referred to as intercompany transactions. The consolidated financial statements do not provide a true and fair view of the group's financial situation if intercompany transactions are not adjusted.
• Interest paid on a downstream intercompany loan is recognised by a borrower as an expense:
• Interest income and expense, which are recorded by the parent and the subsidiary, respectively, are eliminated in consolidated income statements.
• Intercompany loans that were previously recorded as assets (for the parent company) and liabilities (for the subsidiary) have been eliminated from the consolidated balance sheet. The parent company recognises that portion of the interest income in this case because non-controlling interests pay their fair share of the interest expense.

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