Accounting Treatment
In accounting for liabilities, any bond discount or premium must be amortized over the life of bond. A number of methods may be used for this depending on applicable accounting rules. One possibility is that amortization amount in each period is calculated from the following formula:
= amortization amount in period number "n+1"
Bond Discount or Bond Premium = =
Bond Discount or Bond Premium =
Read more about this topic: Bond Valuation
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