Unearned Interest


Unearned Interest

Interest that has been collected on a loan by a lending institution but has not yet been counted as income (or earnings). Instead, it is initially recorded as a liability. If the loan is paid off early, the unearned interest portion must be returned to the borrower.

Also called "unearned discount".

Unearned interest is an accounting method used by lending institutions to deal with long-term, fixed-income securities. Initially recorded as a liability, the unearned interest will eventually be recorded as income in the lending institution's books over the life of the loan as time passes and the interest is earned.


Investment dictionary. . 2012.

Look at other dictionaries:

  • unearned interest — n. Interest paid to someone by a financial institution before it is actually earned. The Essential Law Dictionary. Sphinx Publishing, An imprint of Sourcebooks, Inc. Amy Hackney Blackwell. 2008 …   Law dictionary

  • unearned interest — interest that has been received on a loan, but that cannot be treated as a part of earnings yet, because the principal of the loan has not been outstanding long enough. Bloomberg Financial Dictionary …   Financial and business terms

  • unearned interest — Interest generally received by a financial institution in advance of the time in which it is earned …   Black's law dictionary

  • Unearned Discount — Interest that has been collected on a loan by a lending institution but has not yet been counted as income (or earnings). Instead, it is initially recorded as a liability. If the loan is paid off early, the unearned interest portion must be… …   Investment dictionary

  • unearned income — un·earned income n: income (as interest and dividends) that is not gained by labor, service, or skill compare earned income Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 …   Law dictionary

  • Unearned Revenue — When an individual or company receives money for a service or product that has yet to be fulfilled. Unearned revenue can be thought of as a pre payment for goods or services which a person or company is expected to produce to the purchaser. As a… …   Investment dictionary

  • Unearned Income — Any income that comes from investments and other sources unrelated to employment services. Examples of unearned income include interest from a savings account, bond interest, tips, alimony, and dividends from stock. As long as this income is… …   Investment dictionary

  • unearned income — [[t]ʌ̱nɜː(r)nd ɪ̱ŋkʌm[/t]] N UNCOUNT Unearned income is money that people gain from interest or profit from property or investment, rather than money that they earn from a job. ... reduction in the tax on unearned income could be a boost for… …   English dictionary

  • unearned — adj. not earned. Phrases and idioms: unearned income income from interest payments etc. as opposed to salary, wages, or fees. unearned increment an increase in the value of property not due to the owner s labour or outlay …   Useful english dictionary

  • unearned income — noun 1. personal income that you did not earn (e.g., dividends or interest or rent income) • Syn: ↑unearned revenue • Topics: ↑tax, ↑taxation, ↑revenue enhancement • Hypernyms: ↑ …   Useful english dictionary


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.