As IRS Publication 550 states, for bonds issued after Sept. 27, 1985, taxpayers must amortize bond premium using the constant-yield method, which differs from the straight-line method.

Premium Bond Example. There is a $10,000 bond that’s currently valued at $10,500. It’s a four-year bond with a 10% coupon rate. Each year, the cash payout for that bond will be $1,000 (10%). ... This ...

Under the straight line method, the premium or discount on the bond is amortized in equal amounts over the life of the bond. This is best explained by example. Suppose a company issues $100,000 of ...

A premium bond sells for more than par; ... You can choose either the straight-line amortization -- SLA -- or the effective interest rate amortization method -- EIRA. SLA - Premium Bonds.

Effective-interest and straight-line amortization are the two options for amortizing bond premiums or discounts. The easiest way to account for an amortized bond is to use the straight-line method ...

Methods of Amortization of Bond premium calculation. Popularly there are two methods to calculate the amortization of bond premium. They are as under: Straight-line method.

The straight line method: Here's a clear-cut guide to understanding asset depreciation and amortization.

Unamortized premium is recorded as a credit balance in the Premium on Bonds ... It can be calculated in various ways such as the effective interest rate method or the straight-line amortization ...

To calculate carrying value, you need the bond’s face value and the unamortized premium or discount. As an example, let’s say that a 10-year bond with a $25,000 face value sold for $27,000.

As IRS Publication 550 states, for bonds issued after Sept. 27, 1985, taxpayers must amortize bond premium using the constant-yield method, which differs from the straight-line method.

Accounting with straight line amortization ... Suppose a company issues $100,000 in 10-year, 9% coupon bonds at a premium to face value. Investors only demand an 8% return for owning the bond, ...

Accounting with straight line amortization. ... Suppose a company issues $100,000 in 10-year, 9% coupon bonds at a premium to face value. Investors only demand an 8% return for owning the bond, ...