Hello,
Money advanced to Director against deduction from his salary for 24 months without interest. Is this treated as Loan? or it can be shown as advance?
Request your urgent response on the same.
Thank you.
1 Replies
Nirav
(Accountant)
(595 Points)
Replied 21 July 2015
If it is a genuine case of advance given to director as an advance salary and no interest is collected on that advance, then it should be treated as an advance salary. Loan includes an interest component. As no interest is recovered then it is not a loan. It is advance salary and adjusted in upcoming salary.
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