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Level 2
December 7, 2019
Solved

Simple question: When is a long-term liability payment made, before profit and loss or after.

  • December 7, 2019
  • 1 reply
  • 10 views

Was asked to do a profit and loss to divide up shares of profit, before note payment was made to a share holder. Then after a payment is made, how much should apply to the note, the interest, then the earnings on that particular division of the profits.

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Best answer by TaxMonkey

A loan payment is made generally according to the loan agreement.  Between third parties usually monthly, but from a shareholder, often on demand or according to other terms.  The interest on a shareholder loan is a business expense and should be included on the P and L.

1 reply

TaxMonkeyAnswer
Level 7
December 7, 2019

A loan payment is made generally according to the loan agreement.  Between third parties usually monthly, but from a shareholder, often on demand or according to other terms.  The interest on a shareholder loan is a business expense and should be included on the P and L.