Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 6 - Accounting and the Time Value of Money - Review and Practice - Bridge to the Profession - Codification Exercises - Page 312: CE6-3

Answer

Interest cost comprises the interest associated with capital lease, interest attributed to particular kinds of payables and interest on obligations that have interest rates that are explicit (Master Glossary). "Imputation of interest" refers to the approximation of interest, especially when there is a need to estimate a note's present value since the exchange price of the note cannot be determined, and there is no ready market for the note (Master Glossary).

Work Step by Step

Interest cost comprises the interest associated with capital lease, interest attributed to particular kinds of payables and interest on obligations that have interest rates that are explicit (Master Glossary). "Imputation of interest" refers to the approximation of interest, especially when there is a need to estimate a note's present value since the exchange price of the note cannot be determined, and there is no ready market for the note (Master Glossary).
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