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Company A (Parent Company) owns50% of Company B (Subsidiary Company) and is eligible for Consolidation of financial statements. Company A provided some software development services to Company B for $100k and fully recognized as revenue in financial statements. Company B had capitalized this cost and is depreciating this cost over a period of5 years ($20k each year). If company A is consolidating the financial statements, what is the consolidation adjustment required for the initial year and subsequent years?
If B met all the conditions of a sibsidiary then revenue made from the sales of services to B should be eliminated from consolidated statements and A can book the salaries and related cost actually incurred in A books, under consolidation the group in considered as single entity
For Company A its an Income shown in the P&L and for B DPN Exps and balance in Asset either it can be shown separtely in Statement and grouping it together
it should be $80k in the consolidated financial statements
