This Site Requires Javascript
Burger Menu

Unamortized Bond Discount

Unamortized Bond Discount

What is 'Unamortized Bond Discount'

An accounting methodology for certain bonds. The unamortized bond discount is the difference between the par of a bond - the value of the bond at maturity - and the proceeds from the sale of the bond by the issuing company, less the portion that has already been amortized on the profit and loss statement.

Explaining 'Unamortized Bond Discount'

The discount refers to the difference in the cost to purchase a bond (its market price) and its par, or face value. The issuing company can choose to expense the entire amount of the discount, or can handle the discount as an asset to be amortized. Any amount that has yet to be expensed is referred to as the unamortized bond discount.


Unamortized Bond Discount FAQ

What type of account is unamortized bond discount?

A contra liability account that contains the amount of discount on bonds payable that has not yet been amortized to interest expense.

How do you record bond discount?

Discount on Bonds Payable appears on the balance sheet with the account Bonds Payable. It means a long-term liability bond has both Bonds Payable and Discount on Bonds Payable reported on the balance sheet as long-term liabilities.

What does unamortized mean?

It means it's not amortized, like unamortized costs/fees.

What is Unamortized discount on bonds payable?

An unamortized bond discount is the accounting applied to a bond sold below its face amount. When a bond's stated interest rate is lower than its market interest rate on the date the bond is sold, investors will only agree to purchase the bond at a discount from its face amount.

How do you calculate unamortized bond discount?

To calculate how much you can amortize yearly, add the unamortized bond premium to the face value. Then multiply the result with the yield to maturity, and subtract it from the actual interest paid.

What is unamortized bond premium?

The unamortized bond premium is the part of the bond premium that will be amortized (written off) against expenses in the future. The amortized amount of this bond is credited as an interest expense.

Further Reading

Bond Discount as ExpenseBond Discount as Expense
heinonline.org [PDF]
… It may be reasonable that over a forty-year period the bond discount if amortized would give … The unamortized discount item is nothing but a valuation item, which combined with the credit for the … The bond- holder gets what he thinks to be the more desirable result, viz., a change …

Organizing debt relief: The need for a new institutionOrganizing debt relief: The need for a new institution
www.aeaweb.org [PDF]
… It may be reasonable that over a forty-year period the bond discount if amortized would give … The unamortized discount item is nothing but a valuation item, which combined with the credit for the … The bond- holder gets what he thinks to be the more desirable result, viz., a change …

Governmental accounting for debt: What do practitioners want?Governmental accounting for debt: What do practitioners want?
search.proquest.com [PDF]
… It may be reasonable that over a forty-year period the bond discount if amortized would give … The unamortized discount item is nothing but a valuation item, which combined with the credit for the … The bond- holder gets what he thinks to be the more desirable result, viz., a change …

The Accounting Treatment of Unamortized Discount and Premium in Utility Refunding OperationsThe Accounting Treatment of Unamortized Discount and Premium in Utility Refunding Operations
www.jstor.org [PDF]
… It may be reasonable that over a forty-year period the bond discount if amortized would give … The unamortized discount item is nothing but a valuation item, which combined with the credit for the … The bond- holder gets what he thinks to be the more desirable result, viz., a change …

ON CAPITAL BUDGETING WITH AMORTIZED LIABILITIES: A TECHNICAL NOTEON CAPITAL BUDGETING WITH AMORTIZED LIABILITIES: A TECHNICAL NOTE
www.tandfonline.com [PDF]
… It may be reasonable that over a forty-year period the bond discount if amortized would give … The unamortized discount item is nothing but a valuation item, which combined with the credit for the … The bond- holder gets what he thinks to be the more desirable result, viz., a change …

The burden of the debt and future generations in local financeThe burden of the debt and future generations in local finance
www.jstor.org [PDF]
… It may be reasonable that over a forty-year period the bond discount if amortized would give … The unamortized discount item is nothing but a valuation item, which combined with the credit for the … The bond- holder gets what he thinks to be the more desirable result, viz., a change …

A note on the issuance of long-term pure discount bondsA note on the issuance of long-term pure discount bonds
www.jstor.org [PDF]
… It may be reasonable that over a forty-year period the bond discount if amortized would give … The unamortized discount item is nothing but a valuation item, which combined with the credit for the … The bond- holder gets what he thinks to be the more desirable result, viz., a change …


Tags

bond, discount, unamortized, bonds, interest, payable, premium, face, rate, issued, finance, issue, amount, carrying, amortization, year, calculate, amortized, balance, debt, market, cost, company, accounting, proceeds, december, costs, economics, method, expense, chapter, terms, january, difference, term, amortize, june, fund, long, subtract, asset, corporate, sale, period
Section 508

WCAG 2.0

Section 508