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sir just wanted to confirm if we have to make statement of financial of 1 year later and we have a current loan which is repaid on the basis of fixed equal annual payments (constituting of interest and principal) then we will use its closing balance, after adjusting for interest charged less amount paid, to show on the SOFP, true?
Correct – the closing balance each year will be the opening balance plus the interest for the year and less the amount repaid during the year.
The total repayment (interest + principal) will be the initial amount borrowed divided by the relevant annuity factor, if the total each year is to be of an equal amount.
thank you so much sir, for being so considerate and absolutely patient. No professor can ever be so patient and tolerant of his students. You are a gem!
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