The real interest rate method is a

The real interest rate method is a method of calculating the amortization cost and interest income and expenditure for each period based on the real interest rate of financial assets or financial liabilities, including a set of financial assets or financial liabilities. The real interest rate refers to the interest rate that converts the future cash flow of financial assets or liabilities into the current book value of financial assets or liabilities during the expected or short-term applicable period. In calculating the actual interest rate, the Group estimates future cash flows (excluding future credit losses) based on all contractual terms of financial assets or financial liabilities, and considers various fees, transaction costs, discounts or premiums paid or charged by the parties to the transaction. A financial asset or financial liability contract is part of the real interest rate.