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    crazyromo's Avatar
    crazyromo Posts: 1, Reputation: 1
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    Oct 5, 2010, 09:34 PM
    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?
    ROLCAM's Avatar
    ROLCAM Posts: 1,420, Reputation: 23
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    Oct 6, 2010, 01:35 AM
    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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