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Unsecured Loan

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sayad

Executive

207 Points Posted on 31 March 2021

I have seen in Balance sheet where small trading company lends money to its Ex employee as loan

and this is shown as unsecured loan in Balance sheet

What will be impact on the company profit and loss if this amount is not recovered

can this loss of nonrecovery of loan be sett of against the company profit

Replies (4)

Quick Summary

This discussion explores the accounting treatment of unsecured loans provided by a trading company to ex-employees. If such a loan is not recovered, it's treated as a bad debt and impacts the company's profit and loss statement, rather than being directly offset against profits. The conversation also touches upon tax implications for retired individuals starting a business, including potential tax liabilities and turnover thresholds.

CA. Sourav Sarkar

Chartered Accountant

24588 Points Posted on 31 March 2021

If loan is not paid then it will not effect profit as loan is not related to profit but it should be treated as bad debt. It cannot be set off against company profit