Effective interest
Interest expense = carrying value × periodic EIR.
Amortization adjusts carrying value toward face at maturity.
Key takeaways
- Effective interest matches IFRS 9
- Straight-line is simpler but less precise
Related calculators
Apply these concepts with formula-based tools on Calculator Factory.
- AccountingBond Amortization Schedule Calculator
Build a bond premium or discount amortization schedule using the effective interest method or straight-line comparison.
- AccountingEffective Interest Rate Calculator
Calculate the effective interest rate (EIR) on bonds issued at a premium or discount using iterative yield-to-maturity solving.
- FinanceLoan Amortization Schedule Calculator
Generate a full loan repayment schedule with periodic payments, total interest, and principal vs interest breakdown.
Related articles
- AccountingEffective Interest Rate (IFRS 9)
The effective interest rate is the rate that exactly discounts expected cash flows to initial carrying amount.
- FinanceMortgage Amortization Basics
Amortization spreads loan repayment over time. Early payments apply mostly to interest; later payments apply more to principal on a typical fixed-rate schedule.
FAQ
- How is this related to loans?
- The same effective interest mechanics apply to amortized loan and bond liabilities.