LLP : Interest paid on members loans
AJS 11 Mar 2010 - 18:15
Upon near completion of a lengthy set of LLP accounts with numerous issues
the disclosure checklist has brought to my attention that fact that
interest on members loans should not be included in the P&L heading
'interest payable and similar charges'.
Please could someone advise as to where the credit for the interest
should be shown (and the correponding treatment).
Thanks in advance
I would suggest that
I would suggest that interest is charge to 'members' remuneration charged as an expense'. Refer to example 6 on page 41 of the SORP.
' Loans and other debts due to members' can arise in an LLP balance sheet where (1) the member lends to the LLP or (2) the member's capital is classified as a liability because the LLP has an obligation to repay it in the future.
When members' entitlement to reimbursement increases due to automatic allocation of profits or interest being allocated (as in your case) the double entry is:
Dr Members' remuneration charged as an expense
Cr Loans and other debts due to members
Hope this helps!
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