Bank Loan Interest — Monthly Accrual
Accruing monthly interest on the outstanding bank term loan balance.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Interest Expense (Bank Loan) | Expense (+) | 416,667.00 | - |
| Accrued Interest Payable (Bank Loan) | Liability (+) | - | 416,667.00 |
💡 Accountant's Note
A JOD 100M loan at 5% p.a. accrues JOD 416,667/month. The monthly accrual is settled on the quarterly interest payment date.
Practitioner & Systems Framework
💻 ERP Architecture
Monthly loan interest is accrued by the treasury module based on the outstanding principal balance and the applicable interest rate. For floating rate loans, the rate is updated at each reset date (typically quarterly for SOFR/EURIBOR-based loans). The accrued interest payable clears when the quarterly interest payment is made. The interest calculation is tracked in the treasury management system's loan position report. Where the telecom has multiple bank loans with different rates, the aggregate interest accrual is reconciled to the total accrued interest payable balance in the GL.
⚠️ Audit Flags
Auditors test the interest accrual calculation against the loan balance and applicable rate. Confirm that floating rate changes are applied from the correct reset date. Test the total interest expense against the average loan balance multiplied by the average rate as a reasonableness check. Verify that interest on loans funding qualifying assets is correctly assessed for IAS 23 capitalisation. For Islamic finance facilities (Murabaha, Ijara), confirm that the profit rate/rental payment is correctly accounted for under the applicable IFRS treatment.
📄 Required Documentation
Loan balance schedule, interest rate confirmation (fixed rate certificate or floating rate reset schedule), monthly interest accrual journal, quarterly interest payment confirmation, IAS 23 capitalisation assessment, Islamic finance structure documentation (if applicable), and total interest expense reconciliation.
Automate this entry with the JEH Accounting Suite
Stop doing manual entry. Our VBA-powered ERP automatically generates your ledgers, Trial Balance, and Financial Statements.
No Subscriptions. Own your data.
Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.