Some years ago, the owners of S did a share4share transfer to new holdco H, to create loan notes on the sale (I'm not entirely sure why this works & what the process is, but I'd like to know ...).
My client has now purchased H. It's been agreed that the o/s loan notes in H be w/off. I'm struggling a little with my jnl entries though ...
Starting TB is
Dr Investment £1m
Cr loan notes £300k
Cr Interco £199k
Cr shares £20k
Cr Share Premium £480k
Cr P&L £1k (loan note interest v divs from S)
I obviously want to Dr the loan notes, but do I have to Cr P&L? Because of the nature of how the creditor came about, I want to Cr investment and/or do something with share premium.
I think that I'm confusing myself because I know that the £1m investment is going to be impaired to £nil in next year's accounts.
Am I right this in these accounts I should Dr loan, Dr P&L, then next year Cr investment, Dr P&L and the share premium accounts will just remain on the Balance Sheet forever?
I don't know why I'm struggling with this so much!?!?!
Neartly forgot - FRS102s1A