Banking
Consumer Loan — Early Repayment Penalty
Collecting a penalty when a borrower repays a personal loan before its scheduled maturity.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash / Customer Account | Asset (+) | 500.00 | - |
| Early Repayment Fee Income | Revenue (+) | - | 500.00 |
💡 Accountant's Note
Prepayment penalties compensate the bank for lost future interest income. Under IFRS 9, the EIR is recalculated if the modification is non-substantial; otherwise the loan is derecognized and a new one recognized.
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