Generally accepted accounting principles require that interest expense be measured using the effective-interest amortization method,unless the straight-line amounts are similar.

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Generally accepted accounting principles (GAAP) require that the effective-interest amortization method be used to measure interest expense, unless the straight-line amounts are not materially different. This is because the effective-interest method more accurately reflects the time value of money and the actual interest rate being charged on a loan or bond. However, if the resulting difference between the two methods is not significant, then the straight-line method may be used as an alternative.

Generally Accepted Accounting Principles Require That Interest Expense Be Measured