Why is Principal Repayment not on the Income Statement/P&L Statement? (Accounting Question)

Question

It seems if you only include interest expense and do not include the required payment on the principal, the Income Statement would seem misleading.

In: Other

Answer 1

Well it would be double counting the cost of whatever the loan was used to purchase because it will be expensed through depreciation. Eg you borrow $100k to buy some equipment, you pay the interest as an expense on top of that, and the equipment depreciates over its useful life, accruing $100k expenses and the interest into the P&L.