Effective Interest Method

From Open Risk Manual

Definition

Effective Interest Method, in the context of IFRS 9 [1], is a spreading mechanism that allocates interest revenue or interest expense over a relevant period, and in doing so, amortises or accretes the carrying amount recorded on initial recognition to the ultimate contractual cash flows. The method relies on using the Effective Interest Rate.

See Also

References

  1. IFRS Standard 9, Financial Instruments

External Links