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Kylie Co. owns 80% of Jayzee Inc. On their 12/31/2017 pre-consolidation trial balances, Kylie reports $421,273...

Kylie Co. owns 80% of Jayzee Inc. On their 12/31/2017 pre-consolidation trial balances, Kylie reports $421,273 Liabilities and Jayzee reports $1,360,503 Liabilities. Jayzee owes Kylie $293,981 on this date. What amount should be reported for Liabilities in Kylie's consolidated financial statements?

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Answer #1

As per IFRS, In Consolidated Financial statements, we have to eliminate Inter company owings between Hoding and Subsidiary.

So Total Liabiities to be shown in Consolidated Finanial Statements = $421,273 + $1,360,503 - $293,981

= $1,487,795

Correspondingly, we will reduce $293,981 from total balance of Assets in Consolidated Financial Statements.

Note:

Even Kylie Co. holds 80% in Jayzee Inc., while consolidating we will take total assets and liabiities of Jayzee Inc. excluding Inter company owings and give 20% share to NCI(Non Controlling Interest).

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