Accounting rule...pls help urgent

1.  It will be treated as an loan payable to A company

2. If  A co decides to write-off the loan balance then the same would be written-back in the books of B Co also & will be treated as indirect income in the P&L.  Tax would be accordingly payable on it.

Mr. Nair,  I hope you mentioned about Pvt. ltd co. If so, Loan can be given for the normal interest only. If the amount  is paid and after wipped off means, Dept people will think that the directors are mobilising the funds. Proper Bond should be excuted stating the rate of interest is 12% to 15% and interest should be attracted by Tax deducted @ source. you can't keepon the loan idle without paying principals and interest. First you should clear with this and aim to get entries. sekar>>>>>bala7123 @ dataone.in.