accounting question- bookkeeping

[Jason Malabute]

Many investment firms bought interest cap rates last year when they purchased multifamily properties last year in response to the increasing interest rates because they use variable bridge debt. When the variable rate increase pass the rate cap the firm got an interest rate payment to offsset the exceess interest rate increase. Is interest rate cap payment received by the borrower considered income?Is the following statement true:Under Generally Accepted Accounting Principles (GAAP), interest cap premium payments received by the borrower are typically treated as a liability rather than income. Here is a possible journal entry for the borrower when receiving interest cap premium payments:

1. Initial receipt of interest cap premium payment:
2. Debit: Cash (or a specific cash account) - Increase the cash asset account
3. Credit: Unearned Interest Cap Premium (or a liability account) - Record the liability for the received premium payment
4. Recognition of interest expense over the term of the interest cap agreement:
5. Debit: Interest Expense - Recognize the portion of the premium related to each accounting period
6. Credit: Unearned Interest Cap Premium - Reduce the liability account as the premium is recognized as an expense

1. When a borrower first buys a cap rate it goes on the balance sheet (asset) instead of the income statement right?