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Commonly used to record costs or income generated from sources other than a company’s operations.[sc:kit03 ]
Explanation of Interest Expense
Also called Interest Income and listed on the Income Statement, the Interest Expense contains all income and costs other than the income and costs of operations. Depending on the company’s reporting convention, they may call this figure Interest Expense, or Interest Income if the figure is typically positive.
Importance of Interest Expense
If the company is selling major assets like land, buildings, and other one-time sales, the Interest Expense figure might be exceptionally higher on the financial statement. Large investments, such as stakes in other companies might be listed here, and it is here that you need to watch the investments of the company. They will usually describe in detail these investments in the “Accompanying Notes” section of the financial statement.