Application
Issue price below par creates a discount amortized through interest expense.
EIR is required for amortized cost measurement under IFRS 9 for many debt instruments.
Key takeaways
- EIR differs from coupon rate when price ≠ par
- Used for amortized cost accounting
Related calculators
Apply these concepts with formula-based tools on Calculator Factory.
- AccountingEffective Interest Rate Calculator
Calculate the effective interest rate (EIR) on bonds issued at a premium or discount using iterative yield-to-maturity solving.
- AccountingBond Amortization Schedule Calculator
Build a bond premium or discount amortization schedule using the effective interest method or straight-line comparison.
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FAQ
- When is straight-line acceptable?
- IFRS 9 generally requires EIR; straight-line may appear in simplified educational comparisons only.