标题: Amortizing Premium and Discount on a Held to Maturity Security [打印本页] 作者: torontoanalyst 时间: 2011-7-11 19:22 标题: Amortizing Premium and Discount on a Held to Maturity Security
Hey guys,
I think this may be a Level 1 type review, but wanted to make sure I had this right:
For a discount bond, classified as Held to Maturity:
Balance sheet value = 96,209
YTM = 10%
Coupon = 9%
Total interest income = 96,209 * 10% YTM = 9,621
Total interest income = 9,000 Coupon + 621 discount amortization = 9,621
Income recognized in Income Statement = 9,621
New value of bond on balance sheet = 96,830
For a premiun bond, classified as Held to Maturity:
Balance sheet value = 103,000
YTM = 5%
Coupon = 6%
Total interest income = 103,000 * 5% YTM = 5,150
Total interest income = 6,000 Coupon - 850 premium amortization = 5,150
Income recognized in Income Statement = 5,150
New value of bond on balance sheet = 102,150
Thanks for the help!
Income recognized in Income Statement = 9,621
New value of bond on balance sheet = 96,830作者: Newhuman 时间: 2011-7-11 19:22
That's correct. I just start with interest income (YTMxValue) and then subtract the coupon payment and net it against the value of the bond.
