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A parent issues its own shares to employees of a SUBSIDIARY. The subsidiary's accounting in its own books is:
ARecognise expense (Dr) with corresponding credit to 'Capital contribution from Parent' in equity — treating the SBP as equity-settled at the subsidiary level
BNo entry — parent's transaction
CRecognise as an intercompany loan
DRecognise a liability to the parent
Answer & Solution
Correct answer: A. Recognise expense (Dr) with corresponding credit to 'Capital contribution from Parent' in equity — treating the SBP as equity-settled at the subsidiary level
Group SBP where parent settles via own equity for subsidiary's employees: subsidiary records expense for services received with the credit going to equity (capital contribution from parent). The parent recognises 'investment in subsidiary' with a corresponding credit to equity (securities premium).
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