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Dear Sir,
Can you help me a case below?
My parent company gave my company a loan of total $6,000,000 in 2014. And this will be repaid yearly instalment as scheduled:
2017: $2,000,000
2018: $2,000,000
2019: $2,000,000
The interest rate is 4%. And interest will be charged from 2017. In 2014, 2015 and 2016, interest will be free.At the year end 2014, 2015 what is the balance of loan will be recognised in the Balance sheet? Can you kindly explain and show me clearly the working of this loan?
I do not think this case is ever possible, since parent and subsidiary companies make up a group in a whole. And these two are treated in accordance with single entity concept
This can not possibly be asked in Paper F3.
There could be an inter-company loan, but on consolidation it disappears in the Consolidated Statement of Financial Position (we stopped calling it Balance Sheet many years ago).
For more you should ask in the Paper P2 Ask the Tutor Forum where maybe something like this could be asked.
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