Interest on Debentures Video Lecture | Accountancy CUET Preparation - Commerce

let us quickly also understand two other
concepts with respect to interest on
debentures one is impressed accrued and
Jew and the other is interest for cruel
but not deep now what is interest
accrued and you what is interest accrued
but not you now what happens is when the
company closes his books of account say
on 31st March at the time of year ending
if it has not paid any interest any
outstanding interest must be brought
into the books however suppose suppose
the date of payment of interest for the
company was 31st December and it is pays
interest only once a year
in that case after having paid interest
for 31st December they increase for the
months of January February and March
would remain outstanding however the
company is not liable to pay this
interest now there is a fixed date of
interest that is 31st December so the
impress for the three months is called
interest accrual but it is not yet do
you interest accrual but not yet but if
the company has not paid interest on the
due date at the time of closing of this
of the books of account such interest
would be called interest accrual and to
you the interest accrued and you is
shown along with the ventures so this
becomes a part of long term borrowings
interest accrued but not due on the
other hand is shown as a current
liability so if there is an outstanding
interest but the company is the due date
for paying has not yet come then that
interest is said to be interest accrued
but not you
on the other hand if the due date has
passed and the company is still not paid
the interest it is called in
Crysta cruel and Jim let us take this
example ABC limited issued ten thousand
twelve percent debentures of one hundred
each on 1st July and interest is payable
on 31st December and third tian-chu
now in this case if the company closes
its books on 31st March let us see what
happens this is the same example no
interest was payment was made till 31st
March when did the company issued the
debentures on 1st July so what were the
due dates the due dates for payment of
interest is 31st December and the next
state interest would be 30th June now
the company has not paid in an interest
on 31st March when we come to the PDA
31st March which is in between these two
periods these two dates what is the
position what is the amount of interest
accrued and leave what is the amount of
interest are cool but not you
the amount of interest which is a code
and view is the interest which is
payable up to 31st December this was
duped but not paid so what is the amount
of interest which is up to then view it
is interest for the period 1st July to
31st December 12 months interest so it
is so six months interest 12% of 10,000
debentures in two hundred for six months
equal to 60,000 so this is the amount of
interest accrued and you what is the
amount of
interest accrued but not due from 1st
January to 31st March is the amount of
interest that is 3 months interest 12%
of 10000 debentures of 100 each for 3
months
this would be equal to 30,000 this is
the amount of interest accrued but not
jus so 3 months interest January
February and March is interest accrued
but not do and the amount of interest
which is accrued in June is the six
months interest from first July to 31st
December amount of 60,000 I repeat
interest accrued and do is shown along
with debentures interest accrued but not
you is shown under current liabilities