X (A Pvt. Ltd. Company in India) purchased 500 shares @ 1 Euro each of B (A company incorporated outside India). Since B shares capital consisted of 500 shares, it became wholly owned susbsidiary of X.
X also gave loan of 700 Euro to B during financial year 2013-14 which was recoverted in indian Rs. As on 31/03/14.
Now, during financial year 2014-15, this loan is converted into 700 shares of 1 Euro each.
Please advise
What entry is to be passed
At what value, transaction to be booked
Indian Company X Converts Loan to Equity in Foreign Subsidiary B; Seeks Guidance on Accounting Entries and Valuation A private company in India, X, acquired 500 shares at 1 Euro each of a foreign company, B, making B its wholly-owned subsidiary. X extended a loan of 700 Euros to B during the 2013-14 financial year, which was converted into Indian Rupees as of March 31, 2014. In the 2014-15 financial year, this loan was converted into 700 shares of 1 Euro each. The query seeks advice on the accounting entry to be passed and the value at which the transaction should be recorded. The response inquires if the issue has been clarified. (AI Summary)
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