When the conditions for revenue recognition are satisfied,on which basis should interest be recognized?

Question

Quizplus · Accepted Answer

The interest should be recognized proportionately to the length of the period during which the asset was actually made available and on the basis of the agreed interest rate. This is in line with the principle of matching revenues and expenses, as the interest earned is directly related to the period for which the asset was used by the customer. Recognition of interest based on inflation rate or cash collected is not appropriate as it does not reflect the economic substance of the transaction.

When the Conditions for Revenue Recognition Are Satisfied,on Which Basis