The Company will not be able to repay the Directors, will the present value of this financial liability be nil?

Question

A company has a substantial amount due to Directors and the Company do not have any activity. No interest is charged by the Directors.  The Company would not be able to repay the Director. The Directors’ account will also  increase every year as the Directors paid for the Company’s expenses. As the Company will not be able to repay the Directors, will the present value of this liability be nil? If so, what would be the accounting entry?

Answer 1

if directors pay company expense, then it is recorded as a current liability in the books.

Dr. Expenses a/c
Cr.Payable to director

If you want to write off the payable to directors then

Dr.Payable to directors
Cr. Other income/expense a/c