Loan acquired to buy an asset is a liability of business so interest incurred on that loan is also part of that loan and that's why it is also the liability of business.
Yes payment of loan liability is your expense decreasing the liability as well as asset from which you are paying the loan liability.
No.
As an expense, loan interest should be placed in the debit side of the Profit & Loss A/c and not in the Trading a/c.
Non-Operating Expense
It Depends:If you are the bank, then the loan is an asset because, the loan customer is going to repay you the loan amount with interest and you are going to earn an income from it.If you are the loan customer, then the loan is a liability because you are going to return the money along with interest to the bank that gave you the loan.
Loan interest payable is not shown in income statement rather it is shown in liability side of balance sheet in current liability section.
It Depends:If you are the bank, then the loan is an asset because, the loan customer is going to repay you the loan amount with interest and you are going to earn an income from it.If you are the loan customer, then the loan is a liability because you are going to return the money along with interest to the bank that gave you the loan.
No, it is a liability and goes on the right side of a balance sheet.
debit loan accountcredit owners equityDebit Loan Payable Debit Interest Expense Credit Paid in Capital
When you pay back a loan or mortgage, part of each payment is interest, the rest is principal. For the interest part you would have Interest Expense, for the principal part something like Mortgage Expense.
This is capital employed which is not Equity. It is a liability and attracts a fixed interest with a capital repayment made at the end of the life of the liability
Neither. The actual loan is a capital item and the interest on the loan is an expense for the borrower but income for the lender. The only time the loan itself becomes an expense item is when the unrecoverable portion needs to written off and then it becomes a bad debt. Repayment of the loan is entirely on the asset accounts for both the borrower and lender.