Dear Sir,
An a company getting loan from bank or other and make int on loan its come under expenses or current liability.
pls tell me
Thanks & Regards
S sathis kumar
Riyaz Khan
(CA CS (Exec) MBA (Fin) Asst. General )
(1315 Points)
Replied 26 March 2009
If Company incurrs interest on loan, then it depends on the purpose of availing of loan, for example lf company has raised a loan for acquiring or constructing building, then it should be capitalised in the cost of construction. (You may refer the Definition of Qualifying Asset as per AS-16)
Whereas, if the company raises a loan for working capital expansion i.e, Cash Credit Limit, then interest on such CC should be expensed in the P/L Account.
Thanks
-----------CA Rajan Ali, Ambala
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