Interest Expense is Sometimes CFF?

CFA Level I
#1

Sometimes the interest income/expense is CFF, depending on if the the company involved is not in the finance business? Or if the company involved is a bank, then it’s CFO? I’m confused. -Richard

#2

rellison Wrote: ------------------------------------------------------- > Sometimes the interest income/expense is CFF, > depending on if the the company involved is not in > the finance business? Or if the company involved > is a bank, then it’s CFO? I’m confused. > > -Richard Interest received is CFO if under US GAAP. If it mentions a country outside of the US or says IAS, it can be: IAS Interest received: CFI Interest paid: CFF From the CFAI sample questions, it looks like thats what they want when they say the “best” answer, even though CFO could be used as well for IAS interest received/paid.

#3

Interest expense is always “Operational”. In banks especially. Even otherwise, USGAAP wants it to be operational and is tax free. Whereas IAS is flexible enough to let you show it a finance item as long as you pay, and investment item as long as you recieive interest expense (income).

#4

I am trying to find the question though…there was one question like, Bank A earns interest and Joe’s Manufacturing Company earns interest. Classify Bank A’s interest and Joe’s Interest. Bank A is CFO, Joe’s is CFF.

#5

rellison Wrote: ------------------------------------------------------- > I am trying to find the question though…there > was one question like, Bank A earns interest and > Joe’s Manufacturing Company earns interest. > Classify Bank A’s interest and Joe’s Interest. > Bank A is CFO, Joe’s is CFF. There was a question like this on #26 on the free CFAI sample exam number 1.