If a parent company and 100% owned subsidiary have accounts receivable balances of $350,000 and $100,000,respectively,and included in the parent company's accounts receivable is a $50,000 amount due from the subsidiary,then the consolidated balance sheet for the parent and its subsidiary will show:

Question

Quizplus · Accepted Answer

When preparing a consolidated balance sheet, intercompany balances such as the $50,000 amount due from the subsidiary are eliminated to avoid double counting. Therefore, the consolidated accounts receivable balance will be $400,000 ($350,000 + $100,000 - $50,000).

If a Parent Company and 100% Owned Subsidiary Have Accounts