Accounting entry

CA Rahul Agarwal (CA) (93 Points)

21 April 2016  

If loan taken by a company has been classified as NPA in the books of Bank then no interest is charged thereon as per Prudential Guidelines unless it is realied. But in the books of borrower, provision is to be taken for interest element as the same is payable to bank. We will debit Interest a/c but which accountig head will  be credited? Please clear in light with Accounting Standards.