The contract signed by the parent company is actually the business of the subsidiary company. How should the parent company settle accounts?

The contract signed by the parent company is actually the business of the subsidiary company. The parent company and the subsidiary company should be independent accounting and belong to two independent legal persons.

I. Accounting Treatment of Parent Company and Subsidiary Company

1. In terms of laws and regulations, the parent company and the subsidiary company are two independent subjects, each of which bears civil liability independently.

2. The subsidiary is only an enterprise invested and controlled by the parent company, and it is no different from other enterprises in business form.

3. The parent company and subsidiaries operate independently in finance and operation. Strictly speaking, it is not an internal relationship. This is different from the relationship between the head office and its subsidiaries, and the profit cannot be transferred between the parent company and its subsidiaries.

4. However, there can be capital exchanges between the parent company and the subsidiary company, and it is also allowed to borrow funds from each other.

Two, the difference between the parent company and its subsidiaries is:

1, the two concepts are different.

A parent company refers to a company that owns more than a certain percentage of shares in another company, or can actually control another company through an agreement, while a subsidiary company refers to a company that owns more than a certain percentage of shares in another company, or is actually controlled by another company through an agreement. Both the subsidiary and the parent company have legal person status and can independently bear civil liability.

2. The subsidiary is actually controlled by the parent company, which has the right to decide all kinds of important matters of the subsidiary. The parent company can decide the composition of the board of directors of the subsidiary, or directly exercise the power to appoint directors of the board.

3. The relationship between subsidiaries and parent companies is mainly based on the control or possession of shares.

Relevant regulations: Article 14 of the Company Law: Branches and subsidiaries

Companies can set up branches. The establishment of a branch company shall apply to the company registration authority for registration and obtain a business license. A branch company does not have legal person status, and its civil liability shall be borne by the company. A company may set up subsidiaries, which have legal personality and independently bear civil liabilities according to law.