How to deal with the provision for impairment of entrusted loans?
According to the Accounting System for Business Enterprises, the account of "entrusted loan" accounts for the money lent by financial institutions to other units according to regulations. At the end of the period, the enterprise should conduct a comprehensive inspection of the principal of the entrusted loan, and draw corresponding impairment reserves according to the lower of the principal of the entrusted loan and the recoverable amount. In addition, according to the provisions of the tax law, the provision for impairment of entrusted loans is actually timing difference. The accounting treatment of impairment provision for entrusted loans is as follows:
1. Provision for impairment of entrusted loans at the end of the period:
Debit: deferred tax (deferred tax debit)
Loan: Taxes payable-Income tax payable
Applicable formula for deferred tax debit: deferred tax debit = accrued amount in current period × applicable income tax rate.
2. Reversal of entrusted loan impairment reserve at the end of the period.
Borrow: taxes payable-income tax payable
Credit: deferred tax (deferred tax credit)
Applicable formula of deferred tax deduction: deferred tax deduction = current deduction × applicable income tax rate.
3. Recover the loan and carry forward the accrued entrusted loan impairment reserve:
Borrow: taxes payable-income tax payable
Credit: deferred tax (deferred tax transferred back)
Applicable formula for write-off of deferred tax: write-off of deferred tax = preparation for entrusted loan carried forward × applicable income tax rate.
Debit: investment income-impairment of entrusted loans
Loan: entrusted loan-entrusted loan impairment reserve.
What does it mean to make provision for impairment of entrusted loans?
The provision for impairment of entrusted loans means that at the end of the period, the enterprise shall measure the principal of entrusted loans or the recoverable amount, whichever is lower, and make provision for impairment of entrusted loans for the difference between the recoverable amount and the principal.
The following points should be grasped in the provision for impairment of entrusted loans:
1. If the entrusted loan agreement stipulates that the financial institution entrusted with the loan chooses the loan object and bears the possible loss risk, the entrusted loan does not need to be provided with impairment reserve;
2. If the operating conditions of the financial institution entrusted with lending deteriorate and the cash flow is insufficient, the entrusted enterprise may face the risk of being unable to recover the principal regardless of the financial situation of the unit receiving the loan. At this time, provision for impairment is made according to the amount that may be recovered;
3. When the loan is entrusted, if the borrower can't continue to operate, or is in a closed or pending state, or the borrower stops production due to cancellation, bankruptcy, insolvency and other reasons. And it is estimated that the debt cannot be paid, the impairment reserve can be fully withdrawn.
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