Loan accounting query

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RAHUL MAHAJAN

85 Points Posted on 08 December 2012

Hi..

I have one Query of Loan Accounting.

Whether Holding Company can make DIRECT payment of subsidiary company liability related to imported machinery?

I would be grateful is you could throw some light on the situation by way of citing reference of Accounting Standards.

Replies (2)

archana bakshi

Student

209 Points Posted on 08 December 2012

Currently i have a same type of work experience i have conducted a audit of Power Company there was same situation where the company(Holding) is paying liability of subsidiary company hence it is possible that the holding comapny may pay the liability of subsidiary company and at a periodical interval the comapnies making IBA(Inter Branch Aadvice) for reconciliation of the same.

Giridhar S Karandikar

Team Lead

5675 Points Posted on 14 December 2012

This is not a transaction of a company having a branch of itself. It is transaction between two seperate entities. i.e. a subsidiary & holding co have differnet identities.

If the holding co is making payment on behalf of its subsidiary, it can do so. But necesssary disclosures shud be made in the Asset Register of teh subsidiary company. Is there any specific reason for the holding co making payment for its subsidiary.