Posting the entry

Company A gets a loan and bought a Fixed Assets and given the FA to other Company B.

Both are related party and separate legal entity.

What will be accounting treatment in both Company's

Replies (3)
Quick Summary
This discussion explores the accounting entries for a fixed asset purchased by Company A with a loan and then transferred to related entity Company B. Initially, the entries involve debiting the asset and crediting the loan/vendor. Upon transfer, Company B is debited, and the asset credited. A follow-up clarifies that Company A retains ownership, leading to the suggestion of treating it as a lease arrangement.

For Company A :

When a loan is taken -

Bank A/c Dr

    To Loan Liability Cr

When FA purchased -

FA A/C Dr

   To Vendor Cr

When FA has given to Company B -

Company B A/C Dr

    To FA Cr

 

For Company B :

When FA Received -

FA A/C Dr

    To Company A Cr

Thanking you,

In light of the suggestion following are the followup

the Ownership of the FA is still company A. 

Do we need treat as investment in Company B by Company A, or treat it as normal transaction,

because the loan payment will done by company A

 

 

 

 

 

Ok. In that case, you can treat it as - property given on lease basis.

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