On 12/9/2021 2:04 PM, Gyle McCollam wrote:
If the loan is to the company, as stated in your original email, it is a
liability of the company. Stan is incorrect, but if the company makes a loan
TO the director, then it would be an asset of the company and he would be
correct.
I will repeat that I lack "qualifications" to give accounting advice and
in any case the question is not about my jurisdiction. But I vaguely
recall that such "insider" transactions are handled under "equity".
That's where the accounts would be representing the shares of the
owners. The point is that when an director/part owner borrows from the
company, it is more like withdrawing part of his or her investment. Yes,
hopefully temporarily, which is why being considered a "loan" .
Seriously, if not going to get professional advice at least look the
matter up in an accounting text to see what the proper treatment of this
situation is and for your jurisdiction.
And it might make a (big) difference if this were a "secured loan"
backed up by something other than the borrowers share of the business.
But then I think it would be called something different than a "director
loan".
Repeat, get professional advice or at least learn the accounting
yourself. This is an accounting question, not a gnucash question.
Michael D Novack
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