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Liability-principal & interest

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Liability-principal & interest

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by MikeLittle.
Viewing 2 posts - 1 through 2 (of 2 total)
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  • June 28, 2017 at 7:52 pm #394291
    nari
    Member
    • Topics: 259
    • Replies: 175
    • ☆☆☆

    Hello Mike

    My question is this:

    If an entity borrows 100,000 from the bank, but the interest on the loan is 20,000, would the total liability in the balance sheet be 120,000 or would it be the 100,000 only? If it is 100,000 then how is teh 20,000 treated?

    June 28, 2017 at 7:56 pm #394292
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23350
    • ☆☆☆☆☆

    Dr Cash $100,000
    Cr Loan / Bank Loan / Bank Overdraft $100,000

    Interest of $20,000?

    Either:

    Dr Finance costs $20,000
    Cr Cash $20,000

    or

    Dr Finance costs $20,000
    Cr Loan / Bank Loan / Bank Overdraft $20,000

    OK?

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    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • The topic ‘Liability-principal & interest’ is closed to new replies.

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