20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Interest

This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.

Viewing 2 posts - 1 through 2 (of 2 total)

Author
Posts
September 13, 2016 at 1:21 pm #340330
firelion28
Member
- Topics: 159
- Replies: 83
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
September 13, 2016 at 1:35 pm #340335
John Moffat
Keymaster
- Topics: 57
- Replies: 54696
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).
Author
Posts

Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.