Bond discount amortization is the process through which bond discount is written off over the life of the bond. There are two primary methods of bond amortization: straight-line method and effective interest rate method.
Bond Price Issuance of Bonds Payable at Par Bonds Payable at Premium Bonds Payable at Discount Gain or Loss on Retirement of Bonds Effective Interest Method of Discount/Premium Amortization Straight Line Method of Bond Discount/Premium Amortization Bond Premium Amortization Bond Discount AmortizationX...
Note: In above formula, B20 is the annual interest rate, B22 is the number of actual periods, B19*B23/2 gets the coupon, B19 is the face value, and you can change them as you need. Related articles: How to create loan amortization interest calculator of Excel template?
Taxes could induce price differentials among corporate bonds because of the asymmetric tax treatment of coupon income, return of principal, premium and discount amortization, and capital gains or losses. Dealers and large institutions, which are taxed symmetrically, have an incentive to trade and ...
When a bond is issued at a premium or discount, the excess amount undergoes amortization over the life of the bond. And every six months, when coupon payments are issued, the company will incur an interest expense, which must be recorded in itsincome statement. ...
When a bond is issued at a premium or discount, the excess amount undergoes amortization over the life of the bond. And every six months, when coupon payments are issued, the company will incur an interest expense, which must be recorded in itsincome statement. ...
both Short-Term Capital Gain and market discount. Market Discount is the excess of the stated redemption price of the bond at maturity over the basis of such bond immediately after its acquisition. Funds are required to recognize Short-Term Capital Gain and market discount as ordinary taxable ...
The negative of the principal repaid entry is called the amount for accumulation of discount when a bond is bought at a dis- count. This amortization is also referred to as writing up a bond. Since a bond amortization is algebraically the same as a loan amortization, calculator functions for...
both Short-Term Capital Gain and market discount. Market Discount is the excess of the stated redemption price of the bond at maturity over the basis of such bond immediately after its acquisition. Funds are required to recognize Short-Term Capital Gain and market discount as ordinary taxable ...
The first step in calculating the premium amortization is to determine theyield to maturity(YTM), which is thediscount ratethat equates the present value of all remaining payments to be made on the bond to the basis in the bond.2 For example, consider an investor that purchased a bond for...