How to Record Defense Export Loan Interest
Recording interest expense related to financing for foreign military sales or defense exports, categorized as unallowable.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Unallowable Interest Expense (FAR 31.205-20) | Debit | 5,400.00 | - |
| Cash | Credit | - | 5,400.00 |
💡 Accountant's Note
FAR 31.205-20 explicitly states that interest on borrowings (however represented) is unallowable. These costs must be segregated in a separate account to ensure they are excluded from indirect cost pools.
Practitioner & Systems Framework
💻 ERP Architecture
Map this account to a 'Non-Reimbursable' or 'Unallowable' cost category in the Chart of Accounts.
⚠️ Audit Flags
Interest costs found in overhead or G&A pools during DCAA incurred cost audits.
📄 Required Documentation
Loan agreements and monthly interest statements from the financial institution.
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Discussion & Community Questions
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