PPP book entry

[ILLMAS]

Just wanted to see if anyone has setup the loan on their clients books yet?  One of my client recently were approved and I wanted to see if one would setup the loan just like any other loan?

Thanks

MAS

[Lion EA]

At this time, it's a long-term loan. Down the road, it might be forgiven in all or in part.

[BulldogTom]

Debit Cash, Credit PPP loan.   Other Liability for now until the repayment terms come back from the lender after the forgiveness is calculated.  Then broken out into Long term/Short term based on the ownership intention of how they will repay (indications that they will immediately repay any portion not forgiven). 

Tom
Modesto, CA

[Edsel]

I am using Loans Payable as a credit, but will debit a "contra" account to Loans Payable with a debit balance when PPP loan forgiveness is applied.

When forgiveness comes, I don't believe this should be "revenue".  Too many reporting issues depend on revenue being reported without the clutter.  I believe it should be a reduction in expenses.  That leaves yet another unanswered question - "which" expense?  I don't have a good answer, but I will be allocating the forgiveness amongst all the costs that give rise to the forgiveness.

Forgiveness will turn the P&L for most companies from a loss to a profit.  I haven't heard whether this "profit" will be taxable or not.  You would think it would be taxable, but the personal stimulus payments are NOT.

[Lion EA]

The forgiven loan is not income.

However, the expenses used to obtain forgiveness are not deductible. That's why some people are keeping a separate bank account or a separate bookkeeping account for the loan and the expenses paid. You do need to keep the documents for something like seven years after forgiveness or repayment of the loan. At this time, the expenses will be lower, so the profit will be higher. Congress has a bill floating around, but we'll see...