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    huyvu's Avatar
    huyvu Posts: 1, Reputation: 1
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    #1

    Sep 14, 2008, 07:17 PM
    Accounting for bonds
    When bonds are sold at a premium and the effective interest method is used for amortization, at each subsequent interest payment date, the cash paid is
    acctgwizard's Avatar
    acctgwizard Posts: 3, Reputation: 1
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    #2

    Jan 28, 2009, 12:26 AM

    the carrying value.
    Cynthia514's Avatar
    Cynthia514 Posts: 37, Reputation: 1
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    #3

    Jan 29, 2009, 12:52 PM

    Sorry acctgwizaard, I don't think it's the carrying value. It just a cash payment and we'll pay the same amount every time we have to pay interest. The interest expense will be less than the cash payment (due to the premium). Take the difference of interest expense and cahs payment, subtract it from the bondpayable (the amount remaining from previous period). That's your carrying value for this period after the cash payment has been made.
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