Interest Expense Vs Interest Income
Monday, February 23, 2009
Case: (from Khurram Iqbal - iqbal@rakinvest.ae )
Loan taken by A from B Euro 1,000
Quarterly interest payable to B by A on above loan Euro 100
Loan transferred to C by A Euro 1,000
Quarterly interest payable by C to A Euro 100
Note: At the end of the maturity of above loan A will be liable to payback the full
principal loan amount to B after recovered from C.
Question:
How “A” treats interest expense in its books?
Comment:
- Interest payable to "B" would be interest expense of "A" whereas
- Interest receivable from "C" would be interest income of "A".
Labels: accounting, interest expense
posted @ 4:44 PM,
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