Associated debt

I act on behalf of a limited company client that made a loan to an associated company on a normal commercial basis with interest payable at a commercial rate. That associated company has now gone into liquidation and the loan therefore needs to be written off. My questions are as follows.

Under the financial reporting standards for smaller entities (FRSSE) am I right in thinking that this bad debt should be treated like any other bad debt and therefore appear in operating profits and losses and neither is it an exceptional item?

1. Is there any justification for taking it straight to reserves?
2. Is this loss tax allowable ie does the tax treatment follow the accounting treatment in (1) above?

Query 18 442 – Brook

Reply from Paul Steward

For financial accounting purposes the FRSSE will generally expect...