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going concern
Accountancy
penalty for loan is paid when, the loan amount will be paid but here loan amount is not paid then how did penalty got accrued why is it shown in PL a/c ?
Answers (4)
In the first case,the going concern concept is assumed to be followed. So the company will pay off the loan on the due date, So there will be no early repayment charges. So the charges will not be shown in the profit and loss account. In the second case, the going concern is not followed. So we should repay the loan before the due date. In this case there will be pre payment charges which will be shown in the p/l account and the loan amount will cover pre payment charges also.So 37500 ( 35000+2500) shown in the balance sheet.
siva chaitanya
Loan amount is not paid but prepayment charges should be included in the second case, so we are making the charges 2,500 outstanding this year only. Hope you understood.
2500 is accrued in the year when loan payment is to be made not before that then how is it accrued in this yr pl ?
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