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CMA Intermediate · Financial Accounting · Final Accounts of Commercial Organisations

On 31 March, Kapoor Ltd has a term loan from a bank of Rs 20,00,000 repayable in four equal annual instalments of Rs 5,00,000, the first falling due on 30 September of the next year. Interest accrued and due on the loan is Rs 40,000. How should these be presented in the balance sheet?

Rs 5,00,000 due within twelve months is shown as current maturities of long-term debt, the remaining Rs 15,00,000 stays in long-term borrowings, and the accrued interest of Rs 40,000 is shown separately as a current liability.

  1. ALong-term borrowings Rs 20,00,000; other current liabilities Rs 40,000
  2. BLong-term borrowings Rs 15,00,000; current maturities of long-term debt Rs 5,00,000; interest accrued and due Rs 40,000 under other current liabilitiesCorrect
  3. CLong-term borrowings Rs 20,40,000 in full
  4. DShort-term borrowings Rs 20,00,000; other current liabilities Rs 40,000

Explanation

The first instalment of Rs 5,00,000 falls due within twelve months, so it is shown as current maturities of long-term debt under other current liabilities. The remaining Rs 15,00,000 stays non-current. Accrued interest due is also current.

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