Final answer:
Accrued interest on a loan is noted as a pre-closing expense on the estimated purchaser's cost worksheet, showing the interest that has accumulated but has not been paid by the seller up until the point of closing.
Step-by-step explanation:
When recording accrued interest on a loan on an estimated purchaser's cost worksheet, it is important to list it as an expense that the buyer is assuming from the seller. Accrued interest is the amount of interest that has accumulated on the loan since the last interest payment date but has not yet been paid.
On the worksheet, the accrued interest is typically noted in the liabilities or pre-closing expenses section, and it reflects the interest that has to be paid by the purchaser up to the point of closing.
For instance, if the closing date is mid-month and the last interest payment was made at the beginning of the month, the purchaser would assume the interest accrued from the date of the last payment up until the closing date.
The accrued interest is calculated by taking the annual interest rate, dividing it by the number of days in a year to get a daily interest rate, and then multiplying it by the number of days of interest that have accrued.
Accrued interest is a crucial factor as it ensures that both the seller and buyer are fairly compensated for the period they hold the loan. The seller receives interest up to the date of sale, and the buyer assumes the responsibility for interest that accumulates from that point forward.