Loans and Borrowings - Non-Current
Also called: Long-term Loan, Term Loan
Bank or director loans repayable after more than twelve months, on the Balance Sheet. Interest goes to Interest Expense.
In detail
This ledger holds the part of bank and other loans that is repayable after more than twelve months. When the bank releases a term loan, the money arrives in the bank account and the same amount is credited here, so the balance is a credit that falls as principal is repaid. Interest never touches this account; it is an expense posted to Interest Expense when charged. Nepali banks give a repayment schedule, and the owner should use it at each Ashadh end to move the next twelve instalments to Loans and Borrowings - Current. Posting the full loan to the current ledger, or mixing interest into the principal, misstates either short-term debt or the loan balance.
Formula
Closing balance = Opening balance + New loans drawn - Principal repaid - Portion reclassified to current
Accounting entry
| Account | Debit | Credit |
|---|---|---|
| Bank Account | Rs 20,00,000 | |
| Loans and Borrowings - Non-Current | Rs 20,00,000 |
How to record it in BRAccount
- 01Go to Invoicing > Journal Entry > New and set the posting date to the disbursement date.
- 02Add a row debiting the bank account for the amount received.
- 03Add a row crediting Loans and Borrowings - Non-Current with the same amount.
- 04Write the bank, loan number and tenure in the remark and attach the sanction letter.
- 05Submit. The entry below posts and the loan appears under Non-Current Liabilities.
- 06Record each repayment by Journal Entry: debit this ledger for principal, debit Interest Expense, credit Bank.
When to use it
Post by Payment Entry or Journal Entry when the loan is received. Each year move the next twelve months of instalments to the Current account.
Example from the demo books
Dr Bank Account Rs 20,00,000, Cr Loans and Borrowings - Non-Current Rs 20,00,000 for a five-year business loan from Nabil Bank.