Accounting for debt settelment

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ruchi deshlehra (Querist)
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25 January 2017 Sir My client is having loan outstanding on 31.03.2016 of worth Rs. 150 Cr.Now bank offers him to settle the account by paying 50 Cr. with in coming two years.How to account for the above transaction

Anand

Anand (Expert)
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25 January 2017 I am sure there will be conditions attached to the remission of the loan.
However, you may consider writing down the loan by 100 Crores and crediting it as an item below the line in P&L or in Capital Reserve.
The interest expense outstanding will have to be credited to the Profit and Loss A/c