Where does interest-free borrowing be accounted?

Many individuals and businesses now lend and are borrowing. And a problem they often encounter is where to borrow interest-free accounting ? Take a moment to refer to the following article, you will quickly find a wise answer.

See also: Things to pay attention to when students borrow money without interest .

Interest-free loans and concepts to understand

Interest-free loans and concepts to understand

To know exactly where to borrow interest-free loans, you need to understand what interest-free loans and accounting are.

Interest-free loans are borrowings of cash or other assets valued at 0% interest rate. Or in a parallel sense, it is for other people to borrow cash and assets of equal value but with an interest rate of 0%. This form of borrowing is not rare but it is not difficult to meet in life. Interest-free loans can be made between individuals and individuals, between individuals and organizations or between organizations and organizations.

The second concept related to the issue of interest-free borrowing is economic accounting and accounting. Accounting is the process of observing, calculating, measuring and recording the entire social production process in order to manage those activities more closely and effectively.

Interest-free loans and concepts to understand

Economic accounting can be understood as an economic category of the general commodity economy. The goal is to manage the business operations of businesses based on a combination of planning and goods-monetary relations and the application of commercial methods.

Where does interest-free borrowing be accounted?

Where does interest-free borrowing be accounted?

Where to borrow interest-free loans, we now analyze deeply and solve the problems of these accountants.

According to Point a, Clause 7, Article 3 of Circular 26/2015 / TT-BTC, although the interest rate is 0%, there must be an invoice. On the bill, specify the loan interest. You will have to account and account 1283. The loan amount is accounted for on account 1283 which is not accounted for in Account 138. This is considered a loan that contains risks in the lending process. Only when accounting on account 1283 can accurately measure and evaluate the loss value of that money. You need to understand and account in specific cases as follows:

When lending money to other enterprises:

  • Debit Account 1283
  • Credit Account 112
  • In order to reflect the loan interest rate periodically, then:
  • Debit Account 138
  • Credit Account 515
  • In case of receiving loan interest:
  • Debit Account 111, 112
  • Credit Account 138

When your business borrowed money

When your business borrowed money

Your business needs to regularly monitor every payment term of a loan and a financial lease loan. If the loan has a repayment period greater than 12 months from the date of the financial statement, the accountant should present the loan and long-term financial lease debt. Amounts that are due within the next 12 months from the date of the financial statements, the accountants need to submit the short-term financial lease and debt to have the best payment plan.

Where interest-free loans are taken into account, depending on each case, there will be different accounting methods. Specifically:

If borrowing in cash:

In case of borrowing in Vietnamese currency (imported into the fund or deposited in the Bank), it must be recorded:

  • Debit Account 111 – Cash (1111)
  • Debit Account 112 – Bank deposits (1121)
  • Credit TK 341 – Financial lease and debt (3411).

Where does interest-free borrowing be accounted?

In case of borrowing in foreign currency, it must be converted into Vietnamese currency at the actual exchange rate, recorded as follows:

  • Debit Account 111 – Cash (1112) (borrowing from the fund).
  • Debit Account 112 – Bank deposit (1122) (loan deposited into the bank).
  • Debit in Account 221, 222 (borrowing to invest in subsidiaries or associates or joint ventures).
  • Debit Account 331 – Payable to the seller (borrowing directly to the seller).
  • Debit Account 211 – Tangible fixed assets (borrowing to purchase fixed assets).
  • Debit Account 133 – Deductible value-added tax (if any).
  • Credit TK 341 – Financial lease and debt (3411).

In case the borrowing cost is directly related to the loan (outside of the interest payable) such as making appraisal documents or auditing expenses … then you need to record the following:

Leave a Reply

Your email address will not be published.