If a sole proprietor is a manufacturer and builds a shed to expand it's manufacturing line by taking a loan from bank how is accounting for it done and what will be the impact on p&l and balance sheet and taxation effect of it. Please help.
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Sole proprietorship spends on asset
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Bank loan:
Bank Ac dr
Loan from xxxx bank cr(under loans&liability-Current liabilities)
Repyment of Emi
Loan from xxxx bank dr
Intrest on loan dr(Under finance cost-Profit and loss account)
Bank a/c
Bank Ac dr
Loan from xxxx bank cr(under loans&liability-Current liabilities)
Repyment of Emi
Loan from xxxx bank dr
Intrest on loan dr(Under finance cost-Profit and loss account)
Bank a/c
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