How should a foreclosed purchase be recorded accounting?
Asked By: Giovanna Stark
Date created: Thu, Nov 4, 2021 7:10 PM
Date updated: Mon, Jun 27, 2022 1:45 PM
Top best answers to the question «How should a foreclosed purchase be recorded accounting»
When a bank forecloses on a property that is the collateral of its loan, it effectively acquires the foreclosed asset and releases the borrower from his payment obligation by writing off the defaulted loan. In general, the accounting entries would record a debit to foreclosed asset and a credit to the loan outstanding.
Foreclosed or repossessed real estate should be presented on the balance sheet as a separate amount or included in other assets and disclosed in the notes to the financial statements.