Page 15 - PowerPoint Presentation

CONSOLIDATIONS AFTER THE DATE OF ACQUISITION

Bank overdrafts and guarantees

• On consolidation, the bank overdraft of one entity in the

group should only be set off against the favourable bank

balance of another entity in the group, if both entities

have their accounts at the same bank and when all of the

following three conditions have been met:

• both entities have bank accounts at the same financial

institution;

• the bank itself would set off the two accounts against each

other in terms of an agreement between the two entities

concerned and the bank; and

• the group has the intention to settle the amounts on a net
basis.

• It is clear that the set off of bank accounts within a group

does not constitute intragroup transactions and requires

special treatment.

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