I was wondering the accounting treatment for a director taking a personal loan, but then using those funds to buy assets under a limited company?
Would this be recorded as capital (loan including the total interest) and then it can be repaid to the director monthly as the director has monthly loan payment to make. CR (Capital) DR (Assets)
Assets purchased by Director, sold to limited company including interest of loan. CR (Liability) Dr (Assets). Then the company pays back the liability monthly, as the director has a monthly loan payment to make.
The issue I face here, is if the company then pays back the capital, or liability early, then the interest would actually be lower, as the director pays back the loan early. At this point, the capital or liability would be overstated.
Any suggestions or advice on the appropriate treatment here?
Hey. I would advise you to contact the company directly and learn from them the conditions and what to do in this case. It’s just that there you can find out much more than here on the forum. I can only advise whom to contact but think there yourself. I still work with https://debtquest.com/debt-relief-in-new-york/ and fulfill all the conditions, there will be no problems.
Hard to say definitively, frankly speaking. I don't borrow money quite often. Only when it's really urgent I can go to http://cashcat.vn/ and get some. But in general, I try to avoid it. It's risky after all.