Income Statement Interest Income

In nearly every case interest income earned by an entity is reported below the other income section of the income statement and the internal revenue service irs requires the interest to be reported as taxable income.

Income statement interest income. The interest that is earned on those investments over a period of time is considered income. The amount of interest may have been paid in cash or it may have been accrued as having been earned but not yet paid. Net interest income reflects the difference between the revenue from a bank s interest bearing assets and expenses on its interest bearing liabilities. What is interest income.

Interest income is the amount paid to an entity for lending its money or letting another entity use its funds. In the latter case interest income should only be recorded. Interest come that record in income statement referred to non operating income that entities earned during the periods of time from their investment. Interest income is the revenue earned by lending money to other entities and the term is usually found in the company s income statement to report the interest earned on the cash held in the savings account certificates of deposits or other investments.

Net refers to the fact that management has simply subtracted interest income from interest expense to come up with one figure. Investment here included short term deposit long term or fixed deposit saving account due credit charged to customers and similar kind. In other words if a company paid 20 in interest on its debts and earned 5 in interest from its savings account the income statement would only show interest expense net of 15. Since this interest is not a part of the original investment it is separately recorded.

This amount can be compared to the investments balance to estimate the return on investment that a business is generating.