Unsecured Loan

HI

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.

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
This loss of non recovery of loan  can not be sett of against the company profit

Thanks  Kapadia and sourav for your response 

BAD BEDT is  a loss for the company so how it will be accounted

and what is the reason to wrte off against profit 

Secondly if a retire person  @ 75 years age start a trading bussiness doe he need to pay tax or does he has any relaxation from IT 

what is the minimum turnouver where the tax is not applicable 

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