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?
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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"People who are exceptionally good in business arent so because of what they know but because of their insatiable need to know more"
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 sense (it did in my head)
__________________
"People who are exceptionally good in business arent so because of what they know but because of their insatiable need to know more"
(it did in my head
)
