Company ABC issues a 5-year, $100,000 bond with a stated interest rate of 5%. Due to prevailing market interest rates being higher, the bonds are issued at a discount, and the company receives $95,000. When we issue a bond at a premium, we are selling the bond for more than it is worth. We always Leer másBond Discount: Definition, Example, Vs Premium Bond[…]

And, as noted earlier, it is often auditors’ preferred method to amortize the discount on bonds payable. This method determines the different amortization amounts that need to be applied to each interest expenditure within each calculation period. Similarly, if the coupon rate is lower than the market interest rate, the bonds are issued at a Leer másDiscount on bonds payable definition[…]