My client had loaned some money to a friend however by agreement the friend has 'repaid' the loan by providing services. How to remove this unpaid loan please?

Sole trader paid for a training program for a friend. This was recorded as a loan with the intention that it would be repaid. However the friends circumstances then changed and rather than pay in cash, they did some private work at the business owners home. Now the business owner wishes to 'forgive' this debt. He views that it has been paid in kind. What is the best way to treat this loan?