When the bonds are issued at discount, then the amount of discount (which is a loss) shall be amortized during the life of bonds based on number of interest payments. The total of interest paid for the period and discount to be amortized as computed above shall be treated as expense of the company during the period. On the other hand, the premium received shall also be divided by number of interest payment during the lifetime of bonds. The amount computed shall be deducted from interest payment of the period for computing the total expense of the period The computation of amount amortized at the time of regular interest payment for discount or premium under straight line amortization method need to be determined.

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Chapter 14, Problem 11RQ

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When the bonds are issued at discount, then the amount of discount (which is a loss) shall be amortized during the life of bonds based on number of interest payments. The total of interest paid for the period and discount to be amortized as computed above shall be treated as expense of the company during the period. On the other hand, the premium received shall also be divided by number of interest payment during the lifetime of bonds. The amount computed shall be deducted from interest payment of the period for computing the total expense of the period

The computation of amount amortized at the time of regular interest payment for discount or premium under straight line amortization method need to be determined.

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