Accounting treatment for loan write-off

[azmatas]

Hello All,

Would appreciate some help on how to show a loan (payable) write-off on the books of loan recipient organization. The loan is of relatively significant amount and currently appears as a longterm liability on the balance sheet. Ant tax implications for the write-off?

many thanks!

[azmatas]

please help! I'm looking for the simple double entry with the relevant tax implications. Thanks

[xwebjack]

Currently we dealt the same situation and we had to write off nearly 114 million from our long term loan as per our new contract with the banks. Our auditors treated the written off amount as "Other Income" and according to tax Laws of Pakistan this sort of "Other income" whether it is in cash or not, is Taxable at company taxable rate in case of Pakistan it is 35%

[xwebjack]

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by azmatas</i>
<br />please help! I'm looking for the simple double entry with the relevant tax implications. Thanks
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

Entry should be

Long Term Loan xxx
Other Income xxx

(Debit Long Term Loan and credit other income)
IN this way long term loan will be reduced and other income will be recorded. and at the end of your tax year you have to work for your tax liability

[azmatas]

XWEBJACK thanks for responding!
regards.