Interest on motor vechicle taken

This query is : Resolved

ramanamma (Querist)
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18 July 2013 friends my company taken loan on motor vehicle for three years.

how to treat Interest on loan taken.
is it correct if i take interest on loan as prepaid interest in financial statements.
or is there any other method to disclose interest in financial statements.

we are paying every month Interest & principle on the loan .

thanks & Regards

srinivas reddy

srinivas reddy (Expert)
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18 July 2013 There are two methods to disclose the interest in financial statement
1.we have to shown as expenditure in profit and loss account of that year interest.And reduce the principal amount with payment of emi .
2.If you recoded the total interest (it means that three years interest)as prepaid interest (under assets) and reduce the accordingly yearly interest.