Accounting monograph regarding the novation of a payable bank credit

The company Y is a Romanian juristic person, incorporated according to the Company Law no. 31/1990 and it is a corporate income tax payer. This company contracted in 2012 a bank credit amounting to RON 200,000 for a term of 5 years. Due to financial difficulties, the company could not pay its credit instalments in 2014. On July 30th 2015, the bank assigned its loan contract to a Romanian debt recovery company, for an amount of RON 150,000 and a novation contract has been concluded to this purpose.

According to the Ordinance 1802/2014, the company has to keep track of its long-term credits based on the account 162 “long-term bank credits”.

On the credit side of the account 162 “Long-term bank credits”, the following are to be registered:

– The amount of long-term credits received (512)

– Unfavourable exchange rate differences resulting from end-of-month evaluation, respectively evaluations at the end of the financial year, for the credits in foreign currency (acc. 665)

On the debit side of the account 162 „Long-term bank credits” the following are to be registered:

– The amount of refunded long-term credits (acc. 512)

– Favourable exchange rate differences resulting from an end-of-month evaluation, respectively evaluation at the end of the financial year, of credits in foreign currency, as well as evaluation upon their refund.( acc. 765)

According to the books of the company, such credit is reflected in the balance of the account 1622 “Long-term bank loans in arrears”.

The assignment of credits changes only the juristic person who is entitled to require credit refund, so that no accounting entry is necessary related to that.

A detail account is to be used for the following accounting articles:

581 “Internal transfers” = 1622 “Long-term bank loans in arrears” – Bank – RON 200,000

581 “Internal transfers” = 1622 “Long-term bank loans in arrears” – Z SRL – RON 200,000

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