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  • Oct 5, 2010, 09:34 PM
    crazyromo
    Calculating the interest expense for debt
    A company has $800,000 loan. The loan cannot be prepaid and the interest only payments are at 6%. However, because market rates decrease, the company now values the loan at $815,000. What is the interest expense line item under a fair value accounting system, not GAAP?
  • Oct 6, 2010, 01:35 AM
    ROLCAM
    What is the interest expense line item under a fair value accounting system?

    6% of $815,000 = $48,900 for the year.

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