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 it is: Interest expense is the cost of money. Interest expense is recorded on the income statement. Let's assume you need $500,000 to buy a house. The price of borrowing that money is interest, and it is expressed as a percentage of the amount of money you obtain.
Determine the period of time to properly recognize interest expense. If you need to calculate three months of interest expense, divide the 12 months by the number of months in the desired period. For example, t = 3/12 or 0.25. If the principal is $10,000 and the interest rate is 12 percent (0.12), the calculation would be Interest = $10,000 x 0.12 x 0.25 or $300.