Accounting for Fixed Interest

My client received investments and agrees to pay fixed interest amount of 10%

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Tenure of investments are 1 year.  10% fixed interest.  my client is obligated to pay the 10% regardless of when payback occurs (i..e even if my client choses to repay the investors within 1 year - the interest is still 10% of the total principal investment).  

Whats the right way to account for this?

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By Tim Vane
04th Jul 2020 14:29

Wow, 10%. Can I get some of that action? What's the catch?

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By Raj Accountancy
06th Jul 2020 21:33

ha - actually I wish there was a catch but there is none. My client pays out all the time - I've checked his books - he's got me interested now!

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By WhichTyler
05th Jul 2020 17:26

Dr Interest payable
Cr Liabilities payable within one year

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paddle steamer
By DJKL
06th Jul 2020 09:32

So not investments but loans?

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By Raj Accountancy
06th Jul 2020 21:35

Yes he takes loans from people. Then uses the money to buy / refurbish property. To me that constitutes a loan.

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By Raj Accountancy
06th Jul 2020 21:36

Oh no - what about deferred tax on Unrealised investment property gains? I'm not so good at deferred tax! Any advice would be helpful - sounds like a complex subject!

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