Accounting entries of loan impairment reserve
Loan impairment reserve refers to the reserve drawn by commercial banks to make up for the loan losses that cannot be recovered at maturity. The entries of loan impairment reserve are as follows:
Debit: Asset impairment loss
Loan: loan impairment reserve
Asset impairment loss refers to the loss caused by the book value of an asset being higher than its recoverable amount. According to the relevant provisions of the new accounting standards, the scope of asset impairment includes the disposal of fixed assets, intangible assets and other assets except special provisions.
How to make provision for loan impairment?
Importance of loan impairment reserve
The significance of loan impairment reserve is reflected in two aspects. One is to meet the policy requirements, and this part of assets is still owned by banks, which does not mean that commercial banks will lose the property rights of this part of assets; Second, by increasing the loan loss reserve to increase operating expenses, it can play a role in regulating profits.
How to deal with loan impairment and financial treatment after impairment?
1. Recognition of impairment loss
Debit: Asset impairment loss
Loan: loan loss reserve
Debit: Loan impairment
Loan: loan principal
2. After being damaged, do the following:
Acknowledge receipt of customer's interest.
Borrow: interbank deposits
Loan: the loan is damaged.
According to the actual interest rate, the interest to be confirmed shall be calculated on the basis of amortized cost.
Borrow: loan loss reserve
Loan: interest income