![]() ![]() Interest expense is subtracted from the company's revenues in the income statement to calculate its operating income or net income. Is Interest Expense Added Or Subtracted In Income Statement? This calculation is known as the "average daily balance method". ![]() It's also worth mentioning that in some cases the interest expense can be calculated using the average outstanding balance of the loan instead of the outstanding balance at the end of the period. Additionally, some loans may have a variable interest rate that fluctuates over time, in that case the interest expense will change accordingly. It's also important to note that interest expense can be calculated on a monthly, quarterly, or annual basis, depending on the terms of the loan or credit agreement.
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