The ledger does not have to balance. If the probability of you repaying me is reduced I have no choice under accounting standards but to mark down the value of

The ledger does not have to balance. If the probability of you repaying me is reduced I have no choice under accounting standards but to mark down the value of the loan on my books. You still owe me the money, but the asset on my balance sheet is a function of likelihood you'll go bankrupt.