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Hi
When parent grant a loan of $1mil at zero interest rate to subsidiary for two years. Parent’s incremental borrowing rate is 3% and subsidiary’s incremental borrowing rate is 4%. How do we record the journey entries in Parent’s book?
Appreciate your help.
Thank you.Dr Loan, Cr Cash
The interest will be recorded as zero because it’s an interest free loan
IF we were to record interest, it would be entirely cancelled out on consolidation
Ok?
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