What are the accounting rules for a GIE?


Legal structure allowing at least two companies to carry out joint operations, the GIE has a separate functioning that influences its accounting. For best accountancy training Best school of accountancy In Lahore. Here are some accounting rules that must be followed by the EIG and its members.
Accounting for EIG financing operations
The EIG may or may not be subject to financial contributions from its members.
For any capital contribution, the accounting firm in charge of the EIG will have to write the following entry: debit the account "266 - Other forms of participation" and credit the "512 - Bank" account for an equivalent amount.
For advances incorporated in the capital of the GIE, the account "2676 - Advances consolidables" will be debited and the account "512 - Bank" will be credited.
Finally, for any other type of advances, the account "4581 - Associates - Transactions made in common and in GIE" will be debit and the "512 - Bank" account will be credited.
Recognize GIE's allocation of results
When a GIE makes a profit, it must be distributed among the members. They debit their account "267 - Accounts receivable from participations" and credit their account "7616 - Income on other forms of participation".
If, on the other hand, a loss is recognized, it is necessary to compare the inventory value and acquisition cost of the investment. If the first is less than the second, depreciation on the participation is to be recorded. Account "6866 - Provisions for impairment of financial items" should be debited and "2966 - Provisions for depreciation of other forms of participation" should be credited.
If this impairment is higher than cost , the accounts "6866 - Provisions for impairment of financial items" and "68174 - Provisions for impairment of receivables" will be receivable, while accounts "29676 - Provisions for impairment of receivables Attached to participations "and" 4958 - Provisions for impairment of transactions made in GIE "will be credited.

Finally, since in a GIE, all members are jointly and severally liable for the debts, the recognition of a provision for risks is possible if the impairment of a stake exceeds the value of the assets...

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