treatment of principal repayment of machinery loan
This query is : Resolved
LATHA RAMESH
(Querist)
12 July 2010
Hello Experts
A company is borrowing loan to acquire a machinery. From the 2nd year, it starts repaying the loan as EMI. Interest paid on the loan is revenue in nature and can be expended off, what about the principal payment? I saw in a project report of a company where they had considered the principal repayment for depreciation purpose. Is it correct?
A company is borrowing loan to acquire a machinery. From the 2nd year, it starts repaying the loan as EMI. Interest paid on the loan is revenue in nature and can be expended off, what about the principal payment? I saw in a project report of a company where they had considered the principal repayment for depreciation purpose. Is it correct?
Aditya Maheshwari
(Expert)
12 July 2010
Full value of loan must have been shown under secured loan and full value of machinery under fixed assets and the principal amount being repaid must be reduce the loan balance.
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