indenture (plural indentures) (law) A contract which binds a person to work for another, under specified conditions, for a specified time (often as an apprentice). (law) A document, written as duplicates separated by indentations, specifying such a contract. An indentation. (Can we add an example for this sense?) Translations
What is an 'Interest Expense'. The cost incurred by an entity for borrowed funds. Interest expense is a non-operating expense shown on the income statement. It represents interest payable on any type of borrowings â bonds, loans, convertible debt or lines of credit. It is basically calculated as the interest rate times the outstanding principal amount of the debt. Interest expense on the income statement represents interest accrued during the period covered by the financial statements, and not the amount of interest actually paid over that period.
The annual interest expense is calculated as principal balance multiplied by annual interest rate. In this case, the company reports an interest expense of $10,000 in each of the five years. Note, however, that this calculation can be used for any type of debt in which the accrued interest isn't added to the original principal balance. Related Reading: Problems With Long-Term Debt.