Under IAS 18/AASB 118 interest income should be recognised:

Question

Quizplus · Accepted Answer

Under IAS 18/AASB 118, interest income should be recognised proportionately over time, as the interest is earned. This means that the income should be recognised gradually over the term of the loan as the interest is accrued. It cannot be recognised at the point of sale or when the contract is signed, as this does not reflect the true economic substance of the transaction. It also cannot be recognised at the end of the loan period, as this would result in a distortion of revenue and income recognition.

Under IAS 18/AASB 118 Interest Income Should Be Recognised