14 February 2018
One of my client, who has completed his B.Tech on 2016. His is doing a small business. His last year balance sheet has been finalized. Assets and Liabilities are equal. Now, he told me, he had taken an education loan from a nationalized bank and the amount was directly/ fully paid to that instituion, nothing was credited on his bank account, so, he had forgotten to informed me. Suddenly, he got a letter from that bank to repay the said loan through EMI, then he informed me. So, please advise me, if the total loan amount is taken into liabilities side of Balance Sheet of that that financial year, then what would be the next effect on assets side????
15 February 2018
it is not an asset, Since Bank paid directly to Institute, it should be Expense account dr. to Liability. Just check whether that is as per accounting standards or not. and will it be allowable as per IT act or not.
CAclubindia
