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what will be the change in T account of interest if some portion of it is capitalized…. the question states all finance cost is paid in cash. Does this mean no change in account would occur???? is not this strange that no change in interest account occurs due to capitalization???
if not capitalised, debit interest T account and credit bank account
if it is capitalised, debit qualifying asset T account and credit bank account
thanks, but why Cr. bank.
I mean would not it have been done earlier as well when interest got Dr. and bank got Cr.
so why do it againWhen posting entries from the bank statement to the general ledger, the bank will already have taken the interest from the company’s bank account.
But the first the company knows about that is when the company receives the bank statement. On that occasion the company will record the double entry Dr either the interest account or the qualifying asset account and credit the bank account
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