Investments at Amortised Cost
Long-term investments held to collect fixed interest, such as fixed deposits and bonds, on the Balance Sheet at cost plus accrued interest.
In detail
Investments at Amortised Cost holds long-term deposits and debt instruments the company keeps to collect their fixed interest: a two-year fixed deposit, a government bond, a debenture. The balance is cost plus interest accrued but not yet received, and it is not revalued to market because the plan is to hold to maturity. Interest is credited to Interest Income as it is earned, with the bank withholding 6 percent TDS for natural persons or the entity rate, which lands in TDS Receivable. Nepali banks pay well on fixed deposits, so surplus cash often sits here. A deposit maturing within the next twelve months should be shown under Short-term Investments instead.
Formula
Carrying value = Amount placed + Interest accrued - Interest received; Interest per month = Principal x Rate / 12.
Accounting entry
| Account | Debit | Credit |
|---|---|---|
| Investments at Amortised Cost | Rs 10,00,000 | |
| Bank Account (rename me) | Rs 10,00,000 |
How to record it in BRAccount
- 01Go to Payments > Payment Entry > New, type Internal Transfer, from the bank to Investments at Amortised Cost.
- 02Enter Rs 10,00,000 and Submit; the entry above posts for a two-year Nabil Bank fixed deposit.
- 03Each quarter, post interest by Journal Entry: debit the bank, debit TDS Receivable for tax withheld, credit Interest Income.
- 04At maturity, post a Payment Entry back to the bank for the principal.
- 05Open the ledger from the chart to confirm the balance matches the deposit certificate.
When to use it
Post by Payment Entry or Journal Entry when the deposit is placed. Interest earned goes to Interest Income.
Example from the demo books
Dr Investments at Amortised Cost Rs 10,00,000, Cr Bank Account Rs 10,00,000 for a two-year fixed deposit at Nabil Bank.