CFM23060 - Accounting for corporate finance: UK GAAP before 1 January 2005: borrowers: accrual accounting: fixed rate loans

Accounting for fixed rate loans

A fixed rate loan pays interest at an amount that is fixed for the duration of the loan or is fixed for a period of the loan. Typically the borrower will acquire such a loan at par.

For example, Snapper plc borrows £100m at 8% for 5 years.

At inception the company receives £100m (ignoring expenses) from the bank.

The way a borrower accounts for a fixed rate loan is exactly the same as a variable rate loan, see CFM23050.