I have the situation where a sole director/shareholder in a small ltd co had their overdrawn loan from the company written off. Basically there were insufficient reserves to clear it with a dividend. I understand the tax consequences but am unsure as to how to account for it. The paperwork has dealt with it in terms of a loan to a shareholder that has been written off. That being the case, where do I stick it in the accounts? There seems to be a choice of treating it as an expense in the detailed P&L (i.e. before operating profit) or putting it under the heading of dividends on the basis that it is a distribution to a shareholder. The latter seems the most logical.
23rd Jun 2011 11:31
Accounting for loan to director/shareholder written off
Accounting for loan to director/shareholder...