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Highveldt
Note 2)Included in highveldt’s investments is a loan of $60 million made to samson at the date of acquisition.Interest is payable annually in arrears.Samson paid the interest due for the year on 31 March 2017 but highveldt did not receive this until after year end.Highveldt has not accounted for the accured interest.Hedra
Note 1)Salvador accepted a $50 million 8% loan from Hedra at the date of its acquisition.Plastik(past exam paper december 2014)
Note 2)on 30 september 2014 Plastik accepted a $1 million 10%loan note from Subtrak
When i say i always i mean that when i see the situation looks like that and charge it to investment or deduct it from investment.If there is no any note or any instruction like that how can i deduct loan note from investment it is impossible.
Why should the nci get any of this loan interest? How much money did the nci lend to Salvador? (I’ll leave you to answer those two questions)-that was the anwer of my question.
One more question in the case of hedra, hedra is the pco but salvador is the sco so if salvador accepts loan from hedra and if hedra pays interest in this case we deduct this interest from our GRE but in the case of highveldt it was vice-verse?
In both situations (parent lends to subsidiary or subsidiary lends to parents) interest has to be accounted for
Sometimes the question will say that (a) interest has not yet been accounted for or (b) that interest has been paid but not yet received or (c) that interest has been properly recorded and you need to make whatever adjustments are necessary given that information
Where we have an intra-group loan, interest will have to be accounted for if it hasn’t already been per the question
If it’s a loan from subsidiary to parent interest from the parent needs to be deducted from the parent’s retained earnings and added into the subsidiary’s retained earnings and, …
… if it’s a loan from parent to subsidiary, interest from the subsidiary needs to be deducted from the subsidiary’s retained earnings and added into the parent’s retained earnings
OK?
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