Held to Maturity on B/S? indicate, solution, problem

HuskyGrad2010

The table on page 18 of FRA says they are held at amortized cost. I look at problem 13, page 69, and they indicate in the solution that Held to Maturity are recorded at historical cost on B/S!

defour44

In the example on page 18, the par value of the bonds they purchased was $275k and they paid $300k for them. At the end of the year, they recorded the value of these bonds on the B/S as $297k, which is the "amortized" value of the bonds, since they recorded the bonds initially at $300k, then at the end of each year, they amortize the premium paid on top of par. That makes sense now, but I don't think of that as recording them at cost! Cost would be $300k.

This is the first time, I touch FRA since last year, and I could swear this was a piece of cake for me last year...yet now I'm barely able to figure out just the basic concept....that's not looking good.

Newhuman

they're held at hisorical cost. historical cost is amortized, which makes it the amortized cost. so its two different ways of saying the same thing.