Asked by: Rubel Cunchillos
asked in category: General Last Updated: 7th June, 2020

How do you calculate unamortized discount?

To figure out how much you can amortize each year, you take the unamortized bond premium and add it to the face value. Then multiply the result by the yield to maturity, and subtract it from the actual interest paid. For the first year, the unamortized bond premium is $80, so you would multiply $1,080 by 5% to get $54.

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Also to know is, what is an unamortized discount?

Unamortized Bond Discount Defined A par of a bond is the bond's value at maturity. A bond discount is a bond's excess of par value over its selling price. An unamortized bond discount refers to the balance of a bond discount that remains to be amortized by the issuing firm over the bond's life until it matures.

Furthermore, what type of account is unamortized bond discount? unamortized bond discount definition. A contra liability account containing the amount of discount on bonds payable that has not yet been amortized to interest expense.

Simply so, how is unamortized premium calculated?

Calculating the Unamortized Bond Premium Multiplying the selling price of the bond by the YTM yields $1,090 x 4% = $43.60. This value when subtracted from the coupon amount (5% coupon rate x $1,000 par value = $50) results in $50 - $43.60 = $6.40, which is the amortizable amount.

What type of account is bond premium?

A liability account with a credit balance associated with bonds payable that were issued at more than the face value or maturity value of the bonds. The premium on bonds payable is amortized to interest expense over the life of the bonds and results in a reduction of interest expense.

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