Early Mortgage Receivable Payoff Question

[JMTech]

My company currently holds a mortgage receivable. The payments are current, and the Principal and Interest are properly accounted for. The company has agreed to accept an early payoff amount that is $100,000 less than the current principal balance. What type of account would the $100,000 be debited to? I"m thinking that this is a below the line P&L hit, but I would appreciate another opinion.


My journal entry to record the payment received is:

Dr. Cash $900,000
Dr. ????? $100,000
Cr. Mortgage Receivable ($1,000,000)

Thank you.

 

[bklynboy]

Can you expand why you are forgiving a part of the loan if all payments are current? Assuming you are getting less than principal loaned, you have an impairment loss as you will not be getting back your investment and this should be recorded through the P&L. The debit of 100K is to realized loss.