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Company A taken loan from bank under company A name and given to subsidiary company B.. whose books we record interest expense company A or B?

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Question added by manaf almas , Auditor , DAR AL NUZUM PUBLIC ACCOUNTANTS
Date Posted: 2016/06/27
Zaheer uddin Raja
by Zaheer uddin Raja , Accounts Supervisor , Pakistan International Airlines

There are two transactions,

1- between bank and company A (taking loan from bank). Any interest expense in relation to this loan would be recorded in the books of company A only.

2- between compamy A and company B (providing funds to subsidiary). This provision may take any form as agreed between company A and company B. However, if this is in the form of an interest bearing loan to subsidiary company B, the subsidiary company B would pay interest on this subsequent loan to company A and record interest expense in its own books. (company A would record reciepts as interest income in its books. Net interest expense OR interest income for company A would be the difference between these two items)

Deleted user
by Deleted user

This is a good and useful question, I wish to find acceptable answer

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