Example 1: Intercorporate Investments / Errata recognized, anywhere, interest, solution, amount

Colum

Did the errata wrong a right?
In Example 1 solution: The CFA Errata says that interest income should be 13,500 and not 16500. I get that for Held-to-maturity.
However, why the same for all other cases. The CFA text, when discussing other classification, does not say anywhere that the interest recognized is after amortization and the amortized amount should be added to unrealized gain.
Specifically: at the end of 2008 for Held for trading, AFS, or DAVF cases why would the unrealized gain not be 350,000-300,000 = 50,000? Why does the 3,000 amortization has to be added into the unrealized gain. The text says nothing about this.
Can anyone explain?
Thanks
Vik

Colum

CP, thanks, and I see what your saying - I can follow the procedure, separating out the income that is due to interest (or effective interest) and that due to the difference (in fair value cases) between fair and carrying (amortized) values - I see that the net income (for Held for Trading) is the same anyway, because what’s “given up” in the interest allocation (in the case of premium bonds) is compensated for by a correspondingly greater income from the capital gain (because the carrying value is reduced, and the gap widened between it and market value).
Still, this approach isn’t intuitive for trading assets. It seems simpler to call the coupon “interest” and the let the market adjustments to the bond itself against what you actually paid for it be designated a capital gain/loss, also reported as income, however.
The complex amortization approach seems only to make sense for an asset held for a determined length of time, as in till maturity - since any premium or discount can be run down towards that definite date.
You’re probably right, and so therefore is the correction, but that still leaves a mistake (?) in Schweser where the coupon is specifically identified as the interest payment (for Held for Trading adn AFS).