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Level 1

Covid-related mortgage payments deferral

Hi all,


I have taken over the books of an entity and noticed that COVID related principal and interest deferrals from 2020 were never recorded.


The booked mortgage loan amount agrees with the bank records.  The bank does not record the deferral in their statements, so I do not wish to disturb the amount of the mortgage.  It simply provides a reminder statement quarterly that there is additional amounts owing under the mortgage.


Here is the entry, I just can not figure out where to park the debit on the principal portion of the deferral!


DR Interest Expense

CR Accrued Interest Payable

DR ???

CR Deferred Principal Payments 


Any help is appreciated!


1 Comment 1
Community Champion

Covid-related mortgage payments deferral

Well, if you didn't actually make any payments, then I'm not sure that you need to track the payments you didn't make. They're already represented in the loan balance.


Probably all that need to be entered into the loan account is the monthly statement activity - which is just interest charges.


Of course, if you do that now, and date the interest expense in 2020, or anytime before your current tax period, then the interest won't be deducted from any year's taxes (unless you re-file or the interest was actually included on your taxes, though not on your financial statements.


If you didn't deduct the interest at the time, then note there is a GAAP rule that states you can record expenses in the current period when you discover them late - this year. If that is reasonable and applies, then record all the interest in the current financial/tax year and expense it this year.

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