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Accounting Treatment for waiver of loans

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(Querist)
22 August 2007
Dear Experts

The query which I'm posting is related to accounting treatment for waiver of loans specifically waiver of principal amounts.

Lets say A Ltd. took a loan for financing fixed assets and later on A Ltd. turned into loss making company.

Lender i.e. financial institution waiver off certain portion of principal and interest. Now the query is what should be the accounting treatment of waiver of principal in the books of A Ltd.

rgds
hitesh
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Raj

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Raj (Expert)
22 August 2007 In my opinion it should treat as deffered income & credit to P/L over span of Asset-life
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Raj

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Raj (Expert)
23 August 2007 Hi hitesh our matching concept always demands for it. it our accounting principles set in by our institute.

*Can you say in which AS deffered revenue expenditure has mentioned ?
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Late CA Sampat Jain

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Late CA Sampat Jain (Expert)
23 August 2007 In my opinion it should be written off and crdited to profit and loss account as etra-ordinary item
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