Module 9 Flashcards
Receipt of loan journal entry
Dr bank
Cr loan creditor
Interest expense on loan journal entry
Dr P+L interest costs
Cr Bank
Repayment of loan capital journal entry?
Dr loan creditor
Cr bank
Loan repayment separated into capital and interest elements journal entry?
Dr P+L interest costs
Dr Loan creditor (capital repayment)
Cr Bank
Accrual of interest costs journal entry?
Dr P+L interest costs
Cr Accruals
Don’t accrue capital payments as loan already liability
If loan interest not been paid at year end
Accounting for leases
Treated as though asset belongs to the business - fixed asset at cost
Right of use asset
Have an agreed lease term
Assume payments made in arrears
Recognition of right of use asset and associated lease creditor journal entry?
Dr Fixed assets- cost
Cr lease creditor
Lease payments separated into capital and interest elements journal entry?
Dr P+L interest costs
Dr lease creditor
Cr bank
How to calculate lease creditor balances?
Opening + interest - payment = closing
Break closing down into current and non current
Depreciation of lease assets?
Over the shorter of its tearful life and lease term
Other types of leases?
Short term - 12 months or less
Low-value
Accounting for short term and low value leases?
Charged to P+L on a straight line basis over term of lease
NO liability
DONT capitalise
Basis calculation of lease expense for short term and low value
Total lease payments/number of periods = expense per period
Journal entries to account for lease
Dr P+L lease expense
Cr bank
Cr accrual (or dr prepayment)
Subsequent years of leases with accruals or prepayments?
Not reversed
Difference between rent amount and cash paid will be better off against brought forward accrual or prepayment
