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I came across a doubt while attempting a corporation tax question. We were given the following information in the question:
The figure for loan interest received is calculated as follows:
Accrued at 1 April 2018 : £(5,500)
Received 30 June 2018 : £11,000
Received 31 December 2018 : £11,000
Accrued at 31 March 2019 : £5,500I don’t understand how to interpret this information. I know how to account for loan interest receivable in a corporation tax question. I just don’t understand why accrued interest receivable at 1 April 2018 is negative while accrued interest receivable at 31 March 2019 is positive.
I think your problem isn’t with Taxation but is an accounting problem of not understanding how the accruals system works!
The opening accrual is what was receivable in the previous accounting period and would therefore have been in last year’s assessment – but as this was received in this accounting period it must be deducted in deriving this year’s figure of interest receivable. What is accrued at the end of this period is receivable THIS period and therefore must be added in computing interest receivable for the current period
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