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Hi Mike!
I have some issues concerning loan.
Let’s say the parent has lend some money the subsidiary. When recording the loan, there may be accrued interest and receivable payable in the statement of financial position of the borrower at the year end; the current liability (interest payable) and the current asset (interest receivable) in the in the sub and parent respectively in the individual SOFP.-My issue is that when we consolidate, I know that we eliminate the interest from the CSPL. But in the CSFP, do we also eliminate it(the interest) or we only eliminate the value of loan notes in the parent and sub shown as an asset and liabilities respectively.
Thanks for your time.
Ask yourself this question … “What’s the idea behind this cancellation lark?”
And if your answer is “To eliminate those assets, liabilities, incomes and expenses that are intra-group (and that therefore represent monies owing to / from ourselves on consolidation)” … then there’s your answer!
The interest payable by the borrower that is accrued is correspondingly shown as interest receivable by the lender as loan interest receivable by the lender
And they are two entities within the same group
So cancel
OK?
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