Dear All,
I am stuckup in a situation. Please help me out.
Suppose there are two companies. A Ltd (Holding Company), & B Ltd(100%subsidiary).
A ltd given foreign currency loan to B Ltd. Now B Ltd. has not paid the said loan since 5 to 6 years.
Is there any way out to avoid the booking of foreign currecy losses to hit the P & L.
By converting loan to equity, is it possible avoid the losses to hit P & L.
It's Your previledge,You Can COOK like Satyam Raju,You too can COOL it Like Asatyam Raju.
Yes loan can be squared off by converting it to equity. Conversion will be recommended only if entity A Ltd knows that repayment from B Ltd is not possible. If A Ltd wants the money to be repaid then conversion is not recommended because on conversion to equity A Ltd will be forgoing the right to repayment.
On converstion to equity it will get eliminated in the consolidated financial statements of A Ltd.
No loss on translation will be carried to P&L account then.
SKAA & Associates
New Delhi
CA Inter
View Details
BHUPINDER SHAH AND COMPANY
New Delhi
CA Inter
View Details
CAclubindia
