Loans-capital

[gman]

Owner of corporation continues to put money into sinking corporation to keep it
alive. No plans at this time for any repayments. Would this be considered a loan
or paid in capital?

[Armando Beaujolais]

Owner of corporation continues to put money into sinking corporation to keep it
alive. No plans at this time for any repayments. Would this be considered a loan
or paid in capital?

If there are no plans for repayment, it's not a bona fide loan. It's a contribution to capital.

[gman]

so if

preparing a balance sheet, I can show it as capital contribution and nothing on
the liabilities side?

Thanks

[jimmcg]

The Corporation is a seperate entity. If there is no enforceable loan documentation and repayment plan then with no evidence to the contrary it would appear to be a capital contribution.

[Bird Legs]

Journal Entry to record

Cash Contribution to Corporation will be a debit to bank and credit capital contributions.