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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Interest
If a business has an annual interest of 5% to pay on a loan of $20,000 which it takes on 1st Aug 2005, and the year end is 30 September 2005.
The annual interest is $1000!
in the income statement an interest of $166 will be charged and the business has paid
Sir in the SOFP, wont we charge 1000 as a current liability as we owe that 1000 as an interest in the next 12 months.
Than
No!
As at the 30 September 2005, if they have paid the interest up to that date then nothing is owing.
If the interest up to that date has not been paid then 2/12 x 5% x $20,000 = $167 is owing (which is in both cases the expense in the SOPL).