Interest income
In accounting, interest income is the period-related operating income for interest received from interest- bearing financial assets , which is included in cost and performance accounting . Colloquially, interest income is understood as the result of the interest paid on a financial investment . The corresponding expense is called interest expense .
General
The interest income is called “other interest and similar income” under commercial law and must be shown separately in accordance with Section 275 (2) No. 11 HGB ( total cost method ) or No. 10 HGB ( cost of sales method ). Together with the interest expense, the interest income can be shown as "interest result". However, the offsetting prohibition of Section 246 (2) HGB prohibits direct offsetting of interest income with interest expenses. Interest received relieves the income statement as income and improves the liquidity of a company as income .
content
To the interest income belong to
- Type of interest : fixed or variable interest , interest on arrears received , also in foreign currency;
- Paying the interest : bank interest rates , bond yields , interest income from promissory note loans and shareholder loans . The interest income of a general partner from shareholder loans is not related to its participation in the limited partnership , but is remuneration for loan provision, which is to be viewed as interest income.
The prerequisite is regularly that it is interest that contains a term-dependent component.
Delimitations
A special case is the discount used by customers . According to Section 277 (1) of the German Commercial Code (HGB), this concerns sales deductions that are to be deducted from sales and therefore not part of the interest income. In addition, the interest income is to be separated from the item “other operating income” ( Section 275 (2) No. 4 HGB). All income is recorded here that is neither part of sales nor - due to lack of interest - of interest income. A further distinction must be drawn with regard to income from investments (No. 9). All income that results as profits or dividends from participating in other companies is to be booked here . If the income comes from other securities investments or loans, then they belong in the item “Income from other securities and loans from financial assets” (No. 10).
Credit institutions and insurance companies
While interest income is a rather insignificant source of income for non-banks , it is the most important source of income for credit institutions and is of high relevance to business policy. For this group of companies, its importance can be compared with that of the sales of non-banks. In the case of banks, this includes, for example, interest income from credit and money market transactions and from fixed-income securities. That is why the interest income is the basis for calculating the economic key figure of the interest margin . Interest income ( income from investments and interest income ) also plays a major role in the so-called non-technical result in insurance .
See also
- Interest rate (the various interest calculation methods are listed here)
- Income from capital assets (Germany)