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Accounting for a bank loan into my books

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  • 16-08-2020 12:08pm
    #1
    Lord TSC
    Moderators, Sports Moderators Posts: 42,405 Mod ✭✭✭✭


    Hey everyone,

    I'm sitting here doing up my taxes for 2019 at the moment, and have a quick question. I'm pretty small time so I do it up myself with little hassle, but this year was the first time I've taken a small bank loan. And I'm trying to work out how to account for it into my balance books.

    The loan was for €3000, paid in 12 installments of €259.56. It was taken in October of 2019, so the €3000 and a single payment for €259.56 (in December) need to be accounted for.

    I'm trying to find how to account for this, but Google is being awkward because I'm probably searching for the wrong terms. So if anyone has a link to any site that explains how you note it down, I'd be thrilled.

    A very, very quick read tells me the loan isn't taxed itself, but that I need to account for the interest (9.59 a month) as an expense? Or is that wrong? I know there's a section on the tax form which asks about loans, but wanted to seek clarity before I start adding it in to any columns I shouldn't be adding it in to :P

    Thanks :)


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  • Options
    #2
    TiGeR KiNgS
    Registered Users Posts: 1,435 ✭✭✭TiGeR KiNgS


    Yes, every loan has capital + interest

    the capital element is offset between the bank and the loan on the balance sheet for each repayment with the interest element expensed to the P&L.

    Draw up a loan schedule and use that to identify the interest portion to expense from each repayment. A loan is called 'amortised cost' in accounting terminology.


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