Agree with sahil_vi:
sahil_vi:
I think this one is relatively easier to answer. I have seen several instances where co does expenses for sub from parent P&L & vice versa. This is definitely not clean accounting but as long as Sub & parent are working towards same goals, id just analyse consol P&L and not break it down too much (unless i am confident of accounting hygiene)
I have seen the same in some of the largest corporations globally. Its just how the corporates sometimes allocate costs to a particular cost centre and there could be a number of reasons at play.
From a shareholder’s point of view, the split of the profit pool (or margins) between the parent & its 100% sub makes no difference becoz the entire economic interest in the 100% sub is ultimately attributable to the parent’s shareholders only.
Also, one can’t really deduce a consolidated statement’s individual line items just by looking at the related party transaction report. The right thing is to refer directly to the consolidated statement issued by the company, which has been reviewed/audited by an independent auditor and rely on it as a factual statement, rather than go about reconciling financial statements with incomplete information at hand.
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