Effective interest rate versus straight line method

2018-01-22 18:49:52


In order to account for financing costs & a placement premia/discounts of debt instruments, the effective interest method seems more elegant than the straight-line method (interest rate stays as % of net book value stays constant throughout the security’s life). Are there also practical (e.g. for bookkeepers and accountants) benefits and a potential increased insightful of a company’s accounts?

Many thanks and kind regards,