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Hi Chris,
I have watched your lecture a couple of times and there is a lot of confusion with regards to principles of amortization…and shall appreciate your support to understand below matters
1) Technically Interest receivable is Current Asset (SFP) and Interest received is Income (SPL). So shouldnt we be crediting interest income with 40000, and increase investment on yearly basis only by differential amount between Interest receivable and Interest received
2) If continuing with point 1 above, than the accumulated interest receivable (after each year difference between interest received and interest receivable) shall be debited only at the end of 4th year when full and final payments are received..
I shall deeply value your support in making me understand this important concept. Any recommended additional videos or notes shall be highly appreciated.
1) Yes, the value of the asset is increased and the other side of the entry taken to profit or loss as interest income.
2) At the end of the final year we receive back the cash invested so remove the asset.
Thanks
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