- This topic has 1 reply, 2 voices, and was last updated 3 years ago by P2-D2.
- You must be logged in to reply to this topic.
Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>
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?
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.