March 5, 2023 at 11:09 am #680158
Is the accrued loan interest on a long term loan a current liability or a non current liability and why.
Somewhere in the kit it has been included in current liabilities and at another place it has been included in non current liabilities.
The loan note payment date is not mentioned so the loan note should be assumed as a current liability or a non current liability
March 5, 2023 at 4:15 pm #680192
If a repayment date is not specified in the exam then you assume that it is more than one year away and therefore the loan is a non-current liability.
Interest on loan notes is paid annually and therefore any interest owing is a current liability.
Interest on a loan (as opposed to loan notes) is again usually paid annually. If told that interest was not to be paid annually but would be paid on the maturity of the loan (which is less likely) then the interest owing would be a non-current liability.
March 6, 2023 at 10:06 am #680236
But the loan note is a financial instrument held at amortised cost which means that loan liability is after deducting the coupon rate which suggests that accrued interest has been accounted for as a reduction in non current liability instead of showing it separately as accrued interest. Is it correct
and why is it mentioned in the acca technical article that loan note liability is not split between current liability and non current liability. So the interest also is not split between current liability and non current liability
Also why in the kaplan kit, the accrued interest on a loan note shown as a non current liability
March 6, 2023 at 3:32 pm #680246
What you are asking now is not relevant for Paper FA and so I do not know why you are asking in this forum.
