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Rakhi Vasavada
Rakhi Vasavada, Financial Advisor
Category: Finance
Satisfied Customers: 4545
Experience:  Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
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I have a company loan from an investor, £400k for his 200 of

Customer Question

I have a company loan from an investor, £400k for his 200 of 500 shares. The Investor agreed to wipe this loan down. Down to the value of £20k for just 10 shares.
In the balance sheet I have written this down as -
*Debit investor loan
*Credit share Premium account.
Is this right?
Submitted: 2 months ago.
Category: Finance
Expert:  Rakhi Vasavada replied 2 months ago.

Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

Yes, that would be perfectly correct to do that. You may go on to debit Investor's Loan Account and Credit the Share Premium Account.

I hope this is not a transaction wherein a Debt is being converted into Equity.

From what I understand from your situation, what you are contemplating to do is the right method and you can go ahead and do it.

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,

Customer: replied 2 months ago.
Thanks, ***** ***** was converted to equity where does it get posted?
Expert:  Rakhi Vasavada replied 2 months ago.

Dear Friend,

In that case, you will need to "Close" down the loan account and create and credit Capital account for this.

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,