Bonds

Question 1

Calculation of Discount or Premium Amort

Answer 1

Even if Interest Paid Once a Year, would need to properly report Interest Expense and Balances at each Quarterly B/S Date due to passage of time.

1. Calc Int Expense using Mkt Rate (x Beg Balance)
2. Calc Cash Interest using Stated and Face
3. Squeeze Prem or Disc Amort

Question 2

Calculations per $1000 vs. For Total

Answer 2

For per Bond Calculation, just calculate as if Issue was $1000.
Cash Interest (Payable) = Stated Rate x $1000 if annual.
If calculate for full issue (say $800,000 or 800 Bonds), then would need to divide by 800 at end end to get the PER Bond or PER $1000 answer.