Interest expense is not calculated as the effective interest rate times the amount of the debt outstanding during the interest period for:
A) bonds payable.
B) notes payable.
C) lease payable.
D) lease receivable.

Question

Quizplus · Accepted Answer

Interest expense is not calculated as the effective interest rate times the amount of the debt outstanding during the interest period for lease receivable because interest income is recognized as revenue using the effective interest rate method. For bonds payable, notes payable, and lease payable interest expense is calculated as the effective interest rate times the amount of the debt outstanding during the interest period.

Interest Expense Is Not Calculated as the Effective Interest Rate