If the Sale of an Investment in a Subsidiary Is

question 12

Short Answer

If the sale of an investment in a subsidiary is deemed to be a disposal of a component of the entity, the appropriate accounting treatments for the results its operations for the period and the gain or loss on the sale are:

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Definitions:

Posting Error

A mistake made during the process of entering or recording financial transactions in the accounting records.

Written Off

The accounting action of declaring that an asset is no longer useful and its value has become zero, often leading to its removal from the balance sheet.

Allowance Account

A contra-asset account used to create an allowance for doubtful accounts, representing receivables that may not be collected.

Accounts Receivable

Amounts owed to a company by customers for goods or services provided on credit, which are expected to be collected in cash in the future.