PRC-1 · Chapter 4 · Question 66 of 100
A company has taken a bank loan of Rs. 1,200,000 at 8% per annum. Interest is payable quarterly. Due to financial problems, two installments were missed on September 30 and December 31. What is the interest liability in the Statement of Financial Position on December 31?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 48,000
Explanation
Annual interest is 1,200,000 x 8% = Rs. 96,000. The two missed quarters equal 6 months. Rs. 96,000 x (6/12) = Rs. 48,000 accrued liability.
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