InvestorQ : partners loan is .........liability.
prem Dwivedi made post

partners loan is .........liability.

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Anisha Awate answered.
4 months ago
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In general terms, a loan is a liability, and any contribution from partner in form of a loan cannot be treated as a capital contribution. When a partner gives a loan in partnership, it is repayable on demand and hence cannot become a part of the capital.
So, we treat this loan as a liability. The classification of this loan depends upon the nature of the loan. If there is any specific agreement about how the loan will be classified, we will treat it accordingly. Say, if it is repayable in a period of 5 years, we will treat it is as a non-current liability in the 14 years and current liability at the end of 4th and during 5th year. However, if there is no agreement, it is advisable to treat it as a current liability unless evidence of it being non-current is available.
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