selim (Manager (Finance) ) (62 Points)
17 September 2011Dear Firends,
My MD ask me a question. I really buffled. When a bank sanctions a loan, in 1 st year there is no requirment for loan payment (principal+interest). From 2nd year loan installment (interest+principal) is required to pay. First years interest is accumulated and started to pay back from 2nd year. Bank statement shows all interest/payment from 2nd year.
So, Should I charge 1st year interst in my INCOME STATEMENT of1st year?
THANKS
Prakash
(Chartered Accountant)
(560 Points)
Replied 17 September 2011
Of course you have to Account for the Same in 1St year Income Statement
Accrual Concept Buddy, whether you pay it or not, whether Bank provided it or not in their statement
You have to Account for the Same. You got all information to calculate Interest (Amount Financed, Interest Rate ect)
You are using the funds for doing business naa
As per Matching Concept also you should Match Income with related Expenses naa
CA ADITYA SHARMA
(CA IN PRACTICE )
(16719 Points)
Replied 17 September 2011
| Originally posted by : Prakash | ||
 |
Of course you have to Account for the Same in 1St year Income Statement Accrual Concept Buddy, whether you pay it or not, whether Bank provided it or not in their statement You have to Account for the Same. You got all information to calculate Interest (Amount Financed, Interest Rate ect) You are using the funds for doing business naa As per Matching Concept also you should Match Income with related Expenses naa |
 |
agreed
CAclubindia
