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Hi Mike!
I actually an issue concerning loan. In some questions, I have noted that when P lends money to S, P in it’s SOFP recorded the loan as an investment rather than an individual item under the heading NCA. Could you explain how or why P does so?
Thanks.
More often than not, those occasions when the loan is shown as an investment it’s because the money is due to the former shareholders of the subsidiary and it’s part payment of the purchase consideration
You really need to check very carefully whether the loan note is is part of the cost of acquiring the subsidiary (in which case the loan is due to the former shareholders of S) or it’s a loan to the subsidiary after the acquisition (in which case it’s shown as an asset in the Parent and a long-term liability in the subsidiary)
OK?
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