How to record investment in a second business owned by the first?

yurtdwller

Hello,

I have three companies, representing different real estate - Company A, Company B, and Company C.

Company A is the parent company, owning 100% membership in Company B and Company C, respectively.

Since Company A is the parent company, all money must flow from it for initial investments (before each child company can self-generate income), and eventually, profits from Company B or Company C flows to Company A.

However, I am unsure how to track this chain of events in Wave. How do I best represent the investment on Company A's Wave account, and how do I represent that money received in Company B?

Kimpton

Your best bet is to have a sperate Wave set up for each entity.
ACo would show, as part of it's Equity shares in BCo and CCo. Also in ACo's Assets would be loans and payments made on behalf of the other companies.
BCO and CCo would show in Liabilities amounts paid to them from ACo.
Profits, in the form of Dividends would be paid to ACo.

It's complex. You have to be careful to note those amounts which are loans from one company to the next as versus those amounts which are Equity transfers such as profits.