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Intra Group Loans

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Intra Group Loans

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  • October 9, 2021 at 6:49 pm #637360
    AceSA
    Member
    • Topics: 1
    • Replies: 0
    • ☆

    Hi. I am doing revision on my work and would like assistance in clarifying the treatment of intra group loans.

    The information states that Speedi (Subsidiary) took a loan from Recovery (Parent) at 31 August 2020. The Loan amounts to 13 600 and bears an interest of 9% payable annually in arrears.

    So the statements are reflected as at 31 August 2020 which is the Financial Year end. The question is, should we account for an Interest Expense during the consolidation of the statements or should we only eliminate the loan with a journal entry and then no further effect of the interest?

    October 16, 2021 at 8:22 am #637787
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7231
    • ☆☆☆☆☆

    Hi,

    You would need to account for any interest in the individual accounts (of which there wouldn’t be any as it has only just been taken out) and then eliminate the intra-group interest and the loan balances in the group accounts.

    Thanks,

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