[email protected] Registered Posts: 94 💫 🐯 💫
Hi All,

Wondering if you can help?

I have company A that pays a loan for company B. Company B pays company A back with a dividend throughtout the year, how do I show these on the P&L/BS?



  • stefanboro
    stefanboro Registered Posts: 187 🎆 🐘 🎆
    Hi Vicky,

    Assuming company A does not charge company B any interest then all that's happened is a simple balance sheet liability transfer from the perspective of company B.

    Company B has been relieved of one liability to whomever it owed the money to but in turn now has the same liability to company A.

    Dr Liability to whomever on Bal Sheet
    Cr Liability to Company A

    Company A:

    Dr Asset Loan to Company B
    Cr Bank

    Assuming again that Company B is a subsidiary of Company A then it's up to you (or should I say the directors) whether or not the transfer of resources are just dividends or paying the loan back.

    Assuming then that the transfers are to pay the loan back then from the perspective of company B:

    Dr Liability to Company A
    Cr Bank

    Company A:

    Dr Bank
    Cr Asset loan to company B

    Shoot me down if I made any mistakes here but don't think I did.
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