Aman1

That's the principal only, you record the interest expense as it is incurred, not upfront. The interest liability is going to be recorded in a separate account as a current liab, eg.: Yr1 Dr.Cash 10000 Cr.LT Debt 10000 Yr2 Dr.Int Exp 1000 Cr.Int Payable 1000 Dr. Int Payable 1000 Dr. LT Debt 1000 Cr.Cash 2000 Pretty harsh going straight for Debits & Credits!!! :o For corporates, the total debt is the principal only. Don't forget to include short term portions of long term debt (current liabilities) in this number and potentially any significant operating lease liabilities and the net pension liability if the pension is material. A simple rule of thumb for operating leases is to take the current year operating lease payment (rent) and multiply by 5. Finance leases are already included as debt so no need to worry about those. For pensions, remember to use the actual economic deficit - which means taking the "projected benefit obligation (PBO)" from the notes to the account as the liability and taking the fair value of plan assets. This net liability should be added to the debt if it's a material number, particularly in UK / European companies where the pension can rank senior to bondholders. Would be interesting to know where pension deficits rank in US Chapter 11 bankruptcy. I think banks, perversely, are allowed to record discounts on their debt as a gain (which means I assume they drop the principal amount to face value) but I don't really look at the big banks so someone with better expertise could clarify that. I am a qualified IFRS accountant and did some US GAAP when doing the CFA. I can help on financial reporting questions but will be of no use on tax related stuff (I've never looked at US tax but mainly because tax laws pretty much change every other year, I qualified 10 years ago and have not kept up to date on it).