Accounting Treatment of Shareholder Loans for Joint Ventures Under Ind AS Framework
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- Last Updated on 9 October, 2024
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When the entity has a contractual right to receive cash from the other entity then the entity shall recognize in the books such right as the financial asset in accordance with Ind As 32. The financial asset initially shall be recognized as fair value which represents the present value of expected future cash inflows and any difference between this fair value and the loan amount should be recorded as an investment in the joint venture.
This document provides an in-depth analysis of the accounting treatment of shareholder’s loans in the books of the company where the company sanctioned such shareholder’s loan to its joint venture on the condition that the joint venture would not be required to pay interest until the commercial operation date (COD).
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