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Effective Interest Method
An accounting technique used to allocate the interest expense or income of a bond over its life in a way that yields a constant rate of return.
Interest Expense
The cost incurred by an entity for borrowed funds, which is considered a non-operating expense on the income statement.
Semiannually
Occurring twice a year, typically used in the context of payments, interest accruals, or reporting periods.
Effective-interest Method
A method of amortizing bond discounts or premiums that reflects the constant rate of interest over the life of the bond with respect to its carrying value at the beginning of each interest period.
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