Treasury&RiskMgmt-Transaction Manager- Money market

Hello Colleague,
In the creation of  Money market - Fixed Term Deposit - investment , one select box for  Capitalize interest is present
What does this capitalize interest means?? why it is in the Money market?

Hi, 
It depends on country you are using.
if you check capitalize interest, interest would be added to your deposit account i.e. asset account.  Then it means that interest amount has also been added to the asset and hence we will not pay tax on interest amount.  This is generally done, when you invest back the money which you got from deposit including interest.  Then since you are investing, you won't pay tax for it i.e you are using the money.
If you have not checked the capitalize interest, then you will get the interest amount to your bank or cash and hence it is a revenue, thus you will have to pay tax for interest amount alone depeding on the amount and also the country.
P.S:  If the question is answered kindly close the question.
Regards,
Ravi
Edited by: Ravishankar Ramamurthy on Jul 8, 2009 5:57 PM

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