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Hi sir, I have query as follow:
1. Hire purchase agreement dated 1.jan.2011, deposit paid on same date. But the first instalment start on 1 Feb 2011. Accouting year ended 31 December. Monthly instalment is 500 (including monthly HP interest 50). How much should I transfer from HP interest suspende to p&l? 50*11months =550 or 50*12=600?Hi,
The interest is calculated on the full outstanding liability for January, and then the payment reduces the outstanding liability by 500 and the interest calculated on the remaining balance.
We need more information from the question to be able to calculate the full amount of interest, i.e. the effective rate of interest and the lease liability balance.
Thanks
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