When computing cash interest paid under the direct method,firms subtract the sum of bond discount amortization increase in interest payable from interest expense.

Question

Quizplus · Accepted Answer

This is correct. When using the direct method to compute cash interest paid, the firm will subtract any changes in the bond discount amortization and increases in interest payable from the reported interest expense. This adjustment is made to reflect the actual amount of cash paid during the period.

When Computing Cash Interest Paid Under the Direct Method,firms Subtract