Accounting of write back liability

My company had a book balance at Liability side as Loan from CEA of Rs.120.00 Cr and Interest Accrued and due on Loan of Rs.5.20 cr as on 31-03-2008. After completion of Statutory Audit we came to know that the above balance is not appears in the Books of CEA,as such the total Liability now need to be write back in the current Year (2008-09) accounts.

Now my  queation is that what accounting entries will pass and what will the tratment of the above two liability in 2008-09 i.e to say whether the Interest Accrued balance will be book under crdeit side of the Profit & Loss Account and for Loan Balance whether it will be treated as Free Reserve or capital reserve.

Please help me , this is urgent.