When a discounted bond is sold, the amount of the bond’s discount must be amortized to interest expense over the life of the bond. When using the effective interest method, thedebitamount in the discount on bonds payable is moved to the interest account. Therefore, the amortization causes i...
discount function; amortizing loans; outstanding balance; amortization schedule; compound interest; simple interest JEL Classification: G31; G32; G331. Introduction The past decade has seen a renewed interest in Italy in the valuation of amortizing loans, following an important debate on the ...