05-04-2010, 05:04 PM
The staff loans are material and are for 7 years repayment with and company's interest rate at 6% which is below the bank rates. Example
Co X gives loans to 4 of its staffs say for USD 1 million at the co rate of 6% over 7 years. How should I account the loan and should I use a discount rate to discount the oustanding amt to report the oustanding balance to their Present value and which discounting rate to use. And the how should I account for the difference between the PV amount and the face value of the loan- is it expense directly to p/l or should I create a Revaluation reserve to account the difference there. And for subsequent years how should I account the loan. Awaisaftab pls advice
Co X gives loans to 4 of its staffs say for USD 1 million at the co rate of 6% over 7 years. How should I account the loan and should I use a discount rate to discount the oustanding amt to report the oustanding balance to their Present value and which discounting rate to use. And the how should I account for the difference between the PV amount and the face value of the loan- is it expense directly to p/l or should I create a Revaluation reserve to account the difference there. And for subsequent years how should I account the loan. Awaisaftab pls advice
