Accounting for Mortgages

System
System Posts: 100,537 🤖 Admin 🤖
edited June 9 in AAT member discussion
Hi,<BR><BR>The company I work for has several companies. The director of one company has brought a property (as this company is rentals). I am unsure about what to call it. I have debited the property account but unsure what to call the other account ( I did think equity) but not sure if this is the right one. Does anybody know or could give me suggestions. <BR><BR>Thnankyou

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  • System
    System Posts: 100,537 🤖 Admin 🤖
    Accounting for Mortgages

    The credit would be in the balance sheet under long term liabilities possibly called mortgages due for the principle amount. Interest would be written off to the Interest Expense account in the P&L each month. It would not effect the equity account as this account is for shareholders. You may want to check to see if you can ammortize the interest portion, if you can then all of the mortgage would be posted to the liability account. The liability would be reduced each month with a debit and the corresponding credit to bank. Hope this helps.<BR><BR>James
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Accounting for Mortgages

    Thankyou James, that makes complete sense and is a great help.<BR><BR>Regards<BR><BR>Nina<BR>

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