Effective Interest Method

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August 31, 2024 4 min read Definitions
Effective Interest Method: Accounting for Bond Premiums and Discounts
Accounting Finance Effective Interest Method Bonds Amortization Interest Expense Accounting Methods
The Effective Interest Method is an accounting technique used to amortize bond premiums or discounts. It provides a more accurate representation of the actual interest expense over time by multiplying the bond's carrying amount by the effective interest rate.
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