Loan stock in subsidiary
The holding company may also invest in the loan stock of the subsidiary company or part of the loan stock of the subsidiary company. The cost of the loan stock to the holding company will not be used to compute goodwill but instead should cancel out with the liability appearing in the subsidiary company such that in the consolidated balance sheet, only the loan stock held by 3rd parties in the group will appear.
Group loan stock will thus be given as follows: -
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£
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£
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Loan stock appearing holding company balance sheet
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x
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Add: Loan stock appearing in subsidiary company balance sheet
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x
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Less: Loan stock of subsidiary company held b holding company
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(x)
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Group loan stock
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x
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