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Post Info TOPIC: Loan Interest? P & L or balance sheet
cdyson10


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Loan Interest? P & L or balance sheet
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Hi

I know that the interest on a short term loan needs to be logged as an expense on the P&L, but is that the same for a long term Loan or should this be logged on the Balance Sheet?

Any help much appreciated!!
Thanks
cry

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Dustin57


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The loan should be apportioned between current and long term liabilities at the net amount borrowed (excluding interest). The interest is only recognised in the Profit and Loss on an annual basis.

-- Edited by Dustin57 at 17:18, 2008-10-28

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cdyson10


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Is it the total amount of interest that is added in the P&L or wot is owed throughout that year?weirdface

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Dustin57


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The amount of loan interest to include is the total loan interest divided by the number of months in the accounting period. For example, total loan interest of £2000 over a term of 5 years, would be £400 for the year.

Hope that sort of makes senseconfused (it did in my headsmile)

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