{"id":4984,"date":"2014-07-21T07:04:18","date_gmt":"2014-07-21T05:04:18","guid":{"rendered":"http:\/\/www.officetodo.com\/public\/?p=4984"},"modified":"2014-07-13T07:05:17","modified_gmt":"2014-07-13T05:05:17","slug":"accounting-for-transaction-costs-when-lending-money","status":"publish","type":"post","link":"https:\/\/www.officetodo.com\/public\/accounting-for-transaction-costs-when-lending-money\/","title":{"rendered":"Accounting for transaction costs when lending money"},"content":{"rendered":"<p>With loans you\u2019ll be taking, often times the transaction costs are a significant part of the loan, i.e. like in our example of lending 100,000 a contract fee of 2,000 would be considered as significant. Now in case the cost is less significant, say 500, this would be charged to expenses right away and you\u2019d account your loan received still as 100,000. However, pretending now that the cost was 2,000, you\u2019d account as money obtained 100,000 less this 2,000 (that is 98,000) (see entry number 1) and this 2,000 would over time be credited onto the loan payable so that eventually you\u2019ll still pay back 100,000 (see entry number 2).\u00a0<!--more--><\/p>\n<p>Entry number 1:<\/p>\n<p>Db\u00a0Cash and cash equivalents98,000<\/p>\n<p>Cr\u00a0Loan payable98,000<\/p>\n<p>Entry number 2:<\/p>\n<p>Db\u00a0Interest expense200<\/p>\n<p>Cr\u00a0Loan payable\u00a0200<\/p>\n<p>This 200 is calculated as follows: The loan period is 10 years and the expense spread over the period 2,000. Thus, annually the expense recognised is 2,000 divided by 10, that is 200. This is charged to expenses and also credited to the loan payable amount at the end of every year.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>With loans you\u2019ll be taking, often times the transaction costs are a significant part of the loan, i.e. like in our example of lending 100,000 a contract fee of 2,000 would be considered as significant. Now in case the cost is less significant, say 500, this would be charged to expenses right away and you\u2019d [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[83],"tags":[],"class_list":["post-4984","post","type-post","status-publish","format-standard","hentry","category-1-20-capital"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4984","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=4984"}],"version-history":[{"count":1,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4984\/revisions"}],"predecessor-version":[{"id":4985,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4984\/revisions\/4985"}],"wp:attachment":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=4984"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=4984"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=4984"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}