TOPIC 2 COMPANY ACCOUNT

Consolidated accounts show a parent company and its subsidiaries as one business by combining their finances and removing any internal dealings.

• TRUE

• FALSE

A holding company is effectively defined by its relationship to a subsidiary (as per Section 4(1), which aligns with Section 5 of the Companies Act 1965, revised) — that is, a corporation is deemed a holding company of another if it:

• Controls the composition of the subsidiary's board of directors,

• The other corporation is itself a subsidiary of another corporation (i.e., indirect control through a chain of subsidiaries

• Controls more than half of the subsidiary's voting power,

• A company that is owned or controlled by another company

Journal entry to eliminate owing money:
trade payable/ trade receivable

• Dr Trade payable

  Cr Current account

• Dr Current account

  Cr Trade payable

• Dr Trade payable

  Cr Trade receivable

Journal entry to record the following transaction:
Inludes in the debtors of Holding Company is RM5,000 dent from Subsidiary Company. This amount includes RM400 of inventories in transit.

• Dr Creditor RM5000

  Dr Inventories in transit RM400

  Cr Bills receivable RM5400

• Dr Trade payable RM4600

  Dr Cash in transit RM400

  Cr Trade receivable RM5000

• Dr Trade payable RM5000

  Dr Inventory in transit RM400

  Cr Trade receivable RM5400

• Dr Creditors RM4600

  Dr Inventory in transit RM400

  Cr Debtors RM5000

Bills payable amounted to RM10,000 is from Subs Co and Holds Co had discounted the bills by 10%.

Show the journal entry to record the above transaction.

• Dr Bills payable RM10000

  Cr Current Account RM10000

• Dr Bills payable RM9000

  Cr Account receivable RM9000

• Dr Bills receivable RM9000

  Cr Bills payable RM9000

• Dr Bills payable RM9000

  Cr Bills receivable RM9000

 

Subs Co had remitted RM1500 to Holds Co for the payment of loan, but Holds only received it on 5.1.2026 (year ended 31.12.2025).

Show the journal entry to record the above transaction.

• Dr Loan from Holds Co RM50000

  Cr Loan to Subs Co RM50000

• Dr Loan to Subs Co RM48500

  Dr Inventory in transit RM1500

  Cr Loan from Holds Co RM50000

• Dr Loan to Subs Co RM48500

  Dr Cash In transit RM1500

  Cr Loan from Holds Co RM50000

• Dr Loan from Holds Co RM48500

  Dr Cash in transit RM1500

  Cr Loan to Subs Co RM50000

Journal entry to record impairment of goodwill....

• Dr Goodwill

  Cr Retained profit

• Dr Consolidated Retained Profit

  Cr Goodwill

• Dr Retained profit

  Dr Goodwill

• Dr Non-controlling Interest

  Cr Goodwill

During the year 2025, Subs Co sold inventories costing RM50000 to Holds Co for RM60000. All these goods remained unsold in Holds Co.
Construct the journal entry to record the unrealised profit.

• Dr Retained profit

  Dr Non controlling interest

  Cr Consolidated inventory

• Dr Retained profit

  Cr Consolidated inventory

• Dr Consolidated retained profit

  Dr Non controlling interest

  Cr Consolidated inventory

• Dr Consolidated inventory

  Cr Retained proft

  Cr Non controlling interest

Holds Co sold one of its asset to Subs Co at a lower price.

Prepare the journal entry to eliminate its unrealised profit or loss.

• Dr Consolidated non-current asset

  Cr Retained profit

• Dr Consolidated non-current asset

  Cr Consolidated retained profit

• Dr Retained profit

  dr Non-controlling interest

  Cr Consolidated non-current asset

Holds Co sold one of its asset to Subs Co at a mark-up.

Prepare the journal entry to eliminate its accumulated depreciation.

• Dr Accumulated depreciation

  Cr Consolidated retained profit

• Dr Accumulated depreciation

  Cr Retained profit

  Cr Non-controlling interest

• Dr Consolidated profit

  Cr Accumulated depreciation

• Dr Retained profit

  Dr Non-controlling interest

  Cr Accumulated depreciation