I have a client, who is trying to get a loan, so I want to enhance his financials.
In the Current Liabilities section there is a Due to Related Company of 17000.
The owner of the company, I am preparing the Balance sheet for, also owns the related company.
Is there anyway I can remove this due to related company off the balance sheet of parent company trying to get a loan? IF related company cancels the debt for instance?
You have been asked before to stop SHOUTING!!!!!!!!!!!!!!!!!!!!!!!!!!!!! http://forum.bookkeepers.network/t63532114/click-here-if-you-have-experience-with-construction-accounti/
There is no need to put whole sentences in larger font and bold - we can all read.
For anyone reading this and wishing to respond - poster is in Canada. Also did not acknowledge my long (ish) response last time (presumably because he didnt like what I said)
-- Edited by Cheshire on Friday 12th of May 2017 08:19:52 PM
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Think that the rules and penalties for window dressing are pretty much the same there as well Joanne.
Angelo. all sorts of options are open to your client for debt restructuring but only through the oversight of someone who understands the implications of what they are doing. My advice would be for your client to talk to their accountant who will have spent many years gaining the knowledge required to apply changes both without falling foul of accounting principles and also without risking a financial institution sueing the pants of both them and the client for attempting to play with smoke and mirrors. (Take a look at RBS vs Bannerman Johnston, Maclay and others (2002). Which is a good example of what happens when someone attempts to manage the facts when attempting to borrow money from a fiancial institution).
Basic rule of thumb there is if you had to ask that question in relation to adjusting historic information then you are not in a position to help a client manage the scenario.
Also, as stated by Joanne. Stop shouting.
Any further posts that shout or seek information in order to restructure historic debt without involving a suitably qualified and experienced accountant will result in a banning.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I was only seeking for professional opinion to a simple question.
I dont think some of you read my post correctly , I am not "playing with smoke and mirrors" I am considering what my options are....which disappointingly no one has pointed out.
I think if the Owner can cancel the debt, then the Parent CO wont owe the related party anything, hence can wipe off the "Due to related party" line.
You keep saying you dont mean to shout, yet you have posted another post with most of it in capital letters!!!!!!!!
Shaun has actually pointed out your options - get someone to do the work who knows what they are doing and is appropriately qualified, ie a Chartered Certified Accoountants.
Read the case law!
Read also what Shaun wrote.
You cannot alter history!!!!!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Construction wrote:I am considering what my options are....which disappointingly no one has pointed out.
Sorry, my bad.
Refer client to a chartered Accountant (ACA or CTA)
Or
Refer client to a chartered Certified Accountant (ACCA)
Or
Or CPA (Canada)
As pointed out by Joanne, you cannot change history although you may present it differently. Even where a restructuring of debt takes place the details of the restructuring should be shown on the face of the financial statements giving relevant comparatives and the reason for the change. For example, to give a better view of the companies affairs or to adhere to the requirements of a different financial reporting standard that is more representative of the entities affairs.
The financial institution will also expect to see three years financial statements so even if you change the current year the institution will be looking for the reasoning for such change on the face of the current financial statements.
Refer to IAS1 presentation of financial statements. Also IAS8 changes accounting policies, changes to accounting estimates and errors.
The golden rule is that hindsight alone is not a valid reason for change.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Any decent corporate finance specialist will know how to deal with such related party transactions anyway, without the need for them being hidden just for window dressing!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Now if I could just think of somone who that described... Lol.
Go on, let me pretend that little bit longer that out of the two of us I'm the expert
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
