Accounting for a sister company

[StephanieB]

Hi Everyone

I would like some advice on the following please:
We have just started a sister company in Kenya and we had send some money to them for starting capital. They are an entity on their own with there own set of books etc.
How do I account for it here in South Africa. Do I use an ordinary Loan Account?? or is there another way?

Will appreciate any help from you.

Kindest regards
Stephanie

[StephanieB]

Is there anybody that can advise me, please?

[Mark Atkinson]

Hi Stephanie,

To my knowledge you can account for it as an ordinary Loan Account. You should also disclose the terms of the loan as well as any applicable related parties in your financial statements. (Particularly pertinent if you are a listed company) I would also make sure any board resolutions authorizing the loan are well documented.

Make sure you account correctly for any exchange differences, if applicable. Are you using different currencies? Will they be paying you back in Rands?

[StephanieB]

Thanks so much for your reply. I will certainly make sure that documentation is correct. Good advice.