A partnership business called A wanted to build a second warehouse on the same piece of land, so he applied for a loan through his sister company, Y, and got it under Y's name. As a result, all of the construction was done under Y, and A paid Y as part of an inter-company transaction.
Thus, the building is complete, and the assets are now listed as works in progress under Y Books.
Since A actually uses these stores and both businesses are owned by the same person, we must transfer and capitalize these assets back to A.
What accounting principles must I adhere to?
Intercompany Asset Transfer from PVT to partnership by same ownership
Re: Intercompany Asset Transfer from PVT to partnership by same ownership
The recognition by A will depend on how you actually structure the transaction, e.g. as a lease (then IFRS 16 applies) or as a definite sale (the IAS 16).
See also this guidance:
https://ifrscommunity.com/knowledge-bas ... tatements/
See also this guidance:
https://ifrscommunity.com/knowledge-bas ... tatements/
Re: Intercompany Asset Transfer from PVT to partnership by same ownership
Basically Pvt (Y) borne the capex on behalf of Traders (A) which represent both by one owner.actually traders Contruction for applied the loan through PVT and expenses made under PVT. so now construction has completed and need to capitalize under Traders (A) .but still is under PVT (A) as working progress. now i want to transfer from PVT (Y) to Traders (A) account and make capitalization..
Re: Intercompany Asset Transfer from PVT to partnership by same ownership
As far as I know, IFRS is not applicable on partnerships as a partnership by itself doesn’t constitute a separate legal entity / person. However you can always structure it as a sale of asset to the partnership and for accounting purposes assume the consideration to the cost of the building but this will impose a host of tax consequences. Few things that are not clear? Who will settle the loan? Is the loan going to be legally transferred to the partnership as well?
Re: Intercompany Asset Transfer from PVT to partnership by same ownership
Loan will settle through PVT by funding from partnership since that can not change bank process.
so i now i need to transfer this asset from PVT to partnership since this stores exclusively used for the partnership business..
actually PVT taken this constrution on behalf of partnership since both under one ownership and acted as the construction agent..
so i now i need to transfer this asset from PVT to partnership since this stores exclusively used for the partnership business..
actually PVT taken this constrution on behalf of partnership since both under one ownership and acted as the construction agent..