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Company A owns more than half of Company B. Company B''s balance sheet shows total liabilities of $234K ($33K A/P, $8K due to Company A, $185K due to investors who loaned money, and $8K deferred revenue). Company B actually owes Company A well over $100K. What could cause this not to appear on the balance sheet?

Submitted: 662 days and 5 hours ago.

Category: Tax

Value: $15

Status: CLOSED

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United States

Accepted Answer

XXXXXXX,
My first thought would be an error in accounting. The balance sheet may also reflect related party transactions being eliminated, only leaving the minority shareholders' balance due to company A ($8K).
regards,
Mark D

Accepts:
Expert:	Mark D
Pos. Feedback:	99.6 %
Answered:	1/30/2008

Tax Preparer

MBA, CTEC Registered, CPA Firm Experience with Business and Individual Tax Returns and Issues

662 days and 4 hours ago.

Reply

Reply to Mark D's Post: By "related party transactions", would that be something like Comp

Posted by Mark D 662 days and 4 hours ago.

Answer

No, on a consolidated balance sheet, eliminating entries would be made so that the financials represent a clearer picture of the actual financial position. Your's does not sound like a consolidated balance sheet however because the consolidation would reflect Company A and B together. What is the ownership percentage of A?

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