Loan for capital purposes - capitalise? or just hold on balance sheet

Good afternoon

a council I work with is lending funds to a joint venture for them to construct housing.  The loan will be repaid when the houses are completed, and sold.  Funds for the loan to the JV will be raised by borrowings.

Ignoring interest, a simple way to account for the payment to the joint venture would be:

cr: cash

dr: long term loan

and upon repayment

dr: cash

cr: long term loan

However, loans for capital purposes are required to be part of the capital resource equation under the Code.  Can anyone confirm the accounting treatment for this please? My thoughts would be:

cr: cash

dr: capital spend memo account


cr: capital spend memo account

dr: transfer to non current assets (or maybe refcus as we don't have an asset? so dr: CAA (via CIES/MIRS)

there'd be no MRP as there's no operational asset being consumed;

the CAA would be debited per above;

the Capital Finance Requirement would increase due to underlying need to borrow (in line with the CAA)

Upon repayment:

dr: cash

cr: capital receipts  (via CIES/MIRS)

then to finance

dr: capital receipts

cr: CAA

Any thoughts or views welcome.