Effective Interest Rate Method

21 January 2024, 19:09

The effective interest rate method - a method of calculating the amortized cost of a financial asset or financial liability (or group of financial assets or financial liabilities) and allocating interest income or interest expense for the relevant period. The effective interest rate is the rate applied when discounting calculated future cash payments or receipts over the expected life of the financial instrument, or where appropriate, a shorter period, to the net carrying amount of the financial asset or financial liability. When calculating the effective the interest rate should be calculated by considering all contractual terms of the financial instrument (for example, rights of early redemption, call options, and similar options), but should not take into account future credit losses. The calculation includes all compensation and amounts paid or received by the parties under the contract that are an integral part of the effective interest rate (see IAS 18 "Revenue"), transaction costs, and all other premiums or discounts. It is assumed that cash flows and the expected term of existence of a group of similar financial instruments may be

reliably estimated. However, in those rare cases where it is not possible to reliably estimate cash flows or the expected remaining life of a financial instrument (or group of financial instruments), the entity must use the cash flow data stipulated in the contract throughout the entire contractual term of the financial instrument (or group of financial instruments)

Source: International Accounting Standard (IAS) 39 "Financial Instruments: Recognition and Measurement" (July 18, 2012 edition) (implemented on the territory of the Russian Federation by Order of the Ministry of Finance of the Russian Federation dated November 25, 2011 No. 160n)

Download

PDF ↓

Морфология

Род

Понятие «метод эффективной ставки процента» мужского рода.

Склонение и число

Падеж	Единственное число	Множественное число
Р	метода эффективной ставки процента	методов эффективной ставки процента
Д	методу эффективной ставки процента	методам эффективной ставки процента
В	метод эффективной ставки процента	методы эффективной ставки процента
Т	методом эффективной ставки процента	методами эффективной ставки процента
П	методе эффективной ставки процента	методах эффективной ставки процента