Interest Payments vs Interest Expense

[clip1989]

In explaining the Interest Coverage Ratio effects when capitalizing vs expensing leasing, the CFAI material made it a point to say that interest payments and interest expense are different. can anyone explain the difference?

 

[S2000magician]

If you issue a bond at a premium, the interest expense will be the coupon paid less the amortization of the premium over the life of the bond.
If you issue a bond at a discount, the interest expense will be the coupon paid plus the amortization of the discount over the life of the bond.

 

[clip1989]

thank you kind sir, I can see why you are a Charterholder!

 

[S2000magician]

clip1989 wrote:thank you kind sir

My pleasure.

clip1989 wrote:I can see why you are a Charterholder!

Holding an accounting degree helps.