Banking
NPL Debt Restructuring — Principal Haircut
Accepting a reduction in principal owed as part of an NPL workout agreement.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Allowance for ECL (Applied to Haircut) | Contra-Asset (-) | 200,000.00 | - |
| Loans (Principal Reduced) | Asset (-) | - | 200,000.00 |
💡 Accountant's Note
A principal concession extinguishes part of the debt. The haircut is absorbed by the existing ECL provision. If the provision is insufficient, additional impairment is charged immediately.
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