What is the capitalization of interest is likely to know, not all the inhabitants of our country.Nevertheless, this is an important concept, which determines the final amount of income from bank deposits.In essence capitalization is an analogue of compound interest, which, in turn, represents the accrued interest on the already accrued interest on the deposit.
For example, a person or entity has placed the money in the contribution to the credit institution in the amount of 100 000 rubles under 10% per annum.In the event that interest is charged once at the end of the year, the return an investor will receive 110,000 rubles.
if they are awarded on a monthly basis, and they, in turn, bear interest at the same rate (10%), the amount was on account of the end of the year amounted to 100 000 rubles.(initial amount) x (1 ± 0.1 (rate in fractions) \ 12 (the number of compounding periods) in 12 degree (the number of periods for which funds are available, 12 months) = 110 471.31 rubles. That is, the income of471 rubles. more. That's what the capitalization of interest. The difference, of course, is small, but the larger the amount, and the more often awarded interim income, the greater the amount received as a result of benefits.
But deposit with capitalization of interest is not always unconditionallymore profitable to the same operation with the interest accrued at the end of the period. You should always pay attention to the interest rate, the period of the contract and the interest period. For example, an agreement with the calculation of simple interest at a rate of 12% per annum for the year will be more profitable than contractat the rate of 10% compound interest on a monthly basis throughout the year.
What is the capitalization of interest from the standpoint of accounting? If the organization has placed any amount of contributions with interest payable, it will be counted among the investments.Interest on the deposit agreement are awarded depending on the conditions.Thus from the point of view of accounting matter, these percentages were received or not yet.
deposit with monthly interest capitalization in the amount of 100 000 rubles at the rate of 10 per cent per annum will be reflected in the accounting as follows: Debit Credit Account 58 51 account for the principal amount (100 thousand. Rubles).After the end of the interest period (monthly for 12 months.) 76 debit accounts and credit accounts 91-1 reflects the accrual in the amount of 100,000 x (1 ± 0.1 \ 12) = 10 degrees 12 471.31 rubles.Then he reflected a refund from the deposit (initially 100 thousand. Rub.) On the debit and credit accounts 51 76 account.And finally, have already taken into account the interest received (10 471 31 rubles.) Through the following accounting entries: Debit 51 account is credited by 76.
What is the capitalization of interest from a tax point of view?Here, if the company keeps records of income and expenses in accordance with the method of calculation, a reflection of interest is made at the end of the corresponding period of the reporting date (year), even in cases where the deposit agreements were concluded for a longer period, such as three years.This rule is established by Article 271 of the Tax Code in respect of loan agreements and other similar agreements.
