Retirement of Bonds

Retirement of Bonds - What happens after issuance? Bond...

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Introduction To Financial Accounting HKUST What happens after issuance? Bond carrying amount = Principal – Discount Or = Principal + Premium Principal = face value, never changes. Bond Discount and Bond Premium are amortized. The amortization schedule and amount is decided by the price of the bond at issuance, the face value, and the maturity date. So it’s decided at the issuance date, nothing happens after the issuance date will affect it. Slide 55 Chapter Ten Therefore, the bond’s carrying amount is not affected by anything after bond issuance. It depends only on the information as of issuance. The bond is continuously traded on the bonds exchange, what determine the market price? Introduction To Financial Accounting HKUST What happens after issuance? The bond is continuously traded on the bonds exchange, what determine the market price? Bond’s price always equals the present value of future cash flows. So the bond’s price is determined by the cash flow and the CURRENT discount rate.
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Retirement of Bonds - What happens after issuance? Bond...

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