Interest payable for the year ended December 31 of the current year is 1.5 million.
What is interest?
The monetary charge again for privilege of borrowing money is known as interest. Interest expense as well as revenue is frequently expressed in monetary terms, whereas the interest rate used it to calculate interest has been typically expressed in annual percentage terms (APR). The amount of money received by a lender or financial institution in exchange for lending money is referred to as interest. The amount of owning a stockholder has in a company, usually expressed as a percentage, is also referred to as interest. Interest is the notion of compensating each party for taking a risk and foregoing the ability to use funds, while penalising another party for using someone else's funds. The person who is temporarily parting with their money is entitled to damages, and the person who is temporarily using those funds is frequently required to pay this compensation.
Amount borrowed on 1 october = 100 million
Interest rate = 6% per annum
Interest = 100×6%×3/12 = 1.5 million.
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