Dear AW members
I have received a professional clearance for a new client on Friday. The client bought a property last year, demolished it and is developing houses on the land which will be sold once complete. The project is to be funded from savings as well as some very expensive loan borrowings.
The loan interest is 2% per month so the interest charged is very significant. The previous accountant has reflected this as a an expense which is resulting in a huge loss for the first year financial statement. I am more of the view this should have been included within cost of the construction project and eliminated as development work in progress. The revenue recognition on the project is not an issue.
I shall appreciate if someone is able to provide a second opinion on this. Am I correct in thinking this should have been / can be included within cost of the construction project?