Capital Lease:- Interest expense (non-operating)

CFA Level II
#1

I know this might sound silly. Pls bear with me.

How does interest expense be shown as non-operating on the I/S.

However, in the CFO it is shown as an interest expense.

I seem to be getting confused over this.

could anyone explain this? Perhaps with some example?

#2

It’s one of the stupidities of US GAAP.

You just have to memorize it and move on.

#3

Thanks S2000 magician. These little details seem too confusing now.

For some reason, it seemed easier in level 1.

I am guessing it is because of the depth of the topics covered and the readings dont seem related to each other.

#4

You’re welcome.

I agree: it can be overwhelming at times.

#5

On IFRS int.expenses may be categorized as CFO also as CFF. The last sounds more reasonable and the first solution is maybe IASB’s convergence to FASB.