Please help me with the following example of Basic Accounting:

If you start a business with capital of R10 000, we call it the equity of the business. Later on you borrow R5 000 from a friend because you want to expand the business. Now you have an obligation to repay that loan. If your friend does not want repayment for two or three years, we call itra non- current liability. After some time, your friend and you agree to become partners in the business. On becoming a partner, your friend must put capital into the business. The simplest way to do this is to convert the loan due to your friend as his capital contribution to the business. In this way the equity of the business becomes R15 000, and you no longer owe your friend any money