Interest

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Querist : Anonymous

Querist : Anonymous (Querist)

29 May 2012 sir
what is the journal entry for capitalized interest

thank you

Sanjay Chauhan (IFRS)

Sanjay Chauhan (IFRS) (Expert)
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29 May 2012 Capital Work in progress Dr xxx
To Interest Charge Cr xxx

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Querist : Anonymous

Querist : Anonymous (Querist)

29 May 2012 sir
i can create 'interest charge Cr' under current liability head.(is it payable a/c)

thank you

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Sanjay Chauhan (IFRS)

Sanjay Chauhan (IFRS) (Expert)
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29 May 2012 First you will pass entry to accrue interest on a loan as follows:

Interest Expense Ac Dr.....xx
To Borrowing/Accrued interest Cr.....xx

Then you pass the earlier suggested entry for capitalisation. This will reduce the debit in P&L and bring in liability at balance sheet date.

As and when interest is paid, you pass the following entry:

Accrued Interest (B/S) Dr.....xx
To Bank Cr.....xx

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Querist : Anonymous

Querist : Anonymous (Querist)

29 May 2012 sir
thank you very much for your kind attention.

Sanjay Chauhan (IFRS)

Sanjay Chauhan (IFRS) (Expert)
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29 May 2012 Its my pleasure...

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