An eliminating entry is required when a subsidiary owes a parent company but not when the parent owes the subsidiary.

Name: An eliminating entry is required when a subsidiary owes a parent company but not when the parent owes the subsidiary.
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An eliminating entry is required when there are reciprocal balances between the parent and the subsidiary, regardless of which entity owes the other. It is needed to avoid double counting and to present accurate consolidated financial statements.

An Eliminating Entry Is Required When a Subsidiary Owes a Parent