Canada Optimising Balance Sheet - Removing "Due to Related Party" from Other Current Liabilities HELP

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Hi there,


I have a client, who is trying to get a loan, so I want to enhance his financials.


In the Current Liabilities section→ there is a “Due to Related Company” of 17000.


The owner of the company, I am preparing the Balance sheet for, also owns the related company.


Is there anyway I can remove this due to related company off the balance sheet of parent company trying to get a loan? IF related company cancels the debt for instance?

I want to comply with gaap, and not commit fraud.


Thanks.
 

Fidget

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Related party disclosures are a big thing to lenders because they need to know the full picture of a potential client's liabilities to reduce their own risk of non recovery of any loans that they make... so I'm sure you get the picture of where I'm going with this..
 

Steve-LevelUp

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Typically, if they are related parties, depending on the nature of the loan, I am surprised the bank would not want to see consolidated financial statements. Another way to do it would be to (if you can) pay off the liability, so it isn't showing on the balance sheet. This would also improve your current ratio, which might be of interest to the bank. Then, you can just transfer the funds back after the loan is processed.

There's not much else that I can think of.

Regards.
Steve
 

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