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Accounting for loan made to a branch

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Hello Everyone

If a company makes a loan to a branch of the company, should the loan be shown as a separate asset or part of the money at bank figure in the accounts?


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By accountantccole
16th May 2019 12:38

Do you really mean Branch?
Branch is a shoot off of your main company. If you move money to the branch, there isn't a loan as such within the books of the company, the money is still held by the company, just in a foreign account.
If it is a subsidiary, a completely separate legal entity, then it would go on the intercompany loan balance.
These are important distinctions and cross border accounts are full of areas where you can slip up. You need to liaise with the accountant in the UK and abroad and make sure you understand how this is all supposed to work. Being able to distinguish between head office and branch activities in your bookkeeping will be key for the branch taxes. If you don't have accountants, I would seriously consider getting one!

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