Accounting entries while closing loan a/c

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VN KULKARNI (Querist)
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27 September 2011 UNDER THE MAHA. COOPERARIVE SOCEITY ACT,1960,URBAN COOP BANK HAS POWERS TO ACQUIRE THE IMMOVALE PROPERIES OF THE BORROWER IN SATISFACTION HIS LOAN.
BORROWER HAS OVERDUE LOAN OF RS.46LAKHS.THE BANK ACQUIRED THE IMMOVABLE
PROERTY OF THE BORROWER BY EXECUTING REGISTERED SALE DEED FOR RS.42LAKHS.NOW HOW TO ACCONT THESE ENTRIES.AS A REGULAR ENTRY FOLLOWING RENTRIES ARE EXPECTED.=
DR.NON-BANKING ASSET FOR RS.42 LAKHS
CR.LOAN A/C FOR RS.42 LAKHS
DR.INTEREST REMISION A/C RS.04 LAKHS
CR.LOAN ACCOUNT (AMT REMITED) RS.4 LAKHS.
WHETHER THIS IS CORRECT METHOD?IF NOT PL.ELABORATE.(THE LOAN ACCONT WILL BE CLOSED AND NEW A/C NON BKG ASSET WILL BE SHOWN ON THE ASSET SIDE).RESULT WILL BE LOSING OF ASSET FOR THE BORROWER AND ACQUISITION OF NEW ASSET BY BANK.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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27 September 2011 In books of borrower:

Loan A/c Dr. 44
To Building 42
To Loan Remission 2

In books of Bank

Property A/c Dr. 42
Loan Remission 2
To Loan A/c 44

CA Pushpendra Gaur

CA Pushpendra Gaur (Expert)
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28 September 2011 Well sidharth i don't understand from where you catch the figure of 44

CA Pushpendra Gaur

CA Pushpendra Gaur (Expert)
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28 September 2011 Teh entries which are passed by the bank are correct and 100 % right as bank has aquired the asset, it should appears in the books at the cost which it realised

CA Pushpendra Gaur

CA Pushpendra Gaur (Expert)
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28 September 2011 The entries shown in the book of borrower will be definately

Bank Loan A/c DR 46
Loss/ Profit on sale of land DR/CR
To Land A/c

CA Pushpendra Gaur

CA Pushpendra Gaur (Expert)
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28 September 2011 The book value appearing in the land should be credited. If the land is appearing at 25 lakh then 25 lakh will be credited, rest 19 lakh will be profit on sale of land

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