Accountancy Forum

Hi there,

I've a problem.

Under GAAP, intercompany company loans were treated as intercompany creditors in the balance sheet.

However under IFRS, intercompany loans are deemed to be Long term loans and borrowings.
The intercompany funds are loaned to finance the purchase of an asset.
So under IFRS, we reclassify those loans from long term loans and borrowings in to property plant and equipment
(credit Long term loans, debit property plant and equipment).

My question concerns how to journal the transfer from intercompany into long term loans and borrowings.

If anyone has had this problem, all advise would be gratefully received.

So far as the regulatory framework in our country is concerned, the loans that are given by one company to another company are classified as investment in associated undertaking/concerns. so on one hand, these are the loans for one company and for other company, these are the investment. so in my opinion, direct journal for the transaction, you mentioned ,is not possible.

Ok under GAAP a loan was journaled through intercompany and as such was a liability in the balance sheet - as distinct from an investment which is also a liability, but would go through equity in the balance sheet.

My point being - that under IDRS intercompany loans, are now deemed to be Interest bearing loans and borrowings under IFRS.

But I've solved the issue anyhow - I was just looking to see if anyone had the same issue.

Thanks for replying.