Straight-line amortization (straight-line bonds) refers to the average distribution of the total interest expenses of bonds to each interest period. When using the straight-line method to amortize the bond interest expense of Le Fei Company, firstly, the total bond interest expense is divided by 4 (the number of interest payment periods in half a year within the validity period of the bond), and then the interest expense of each bond is calculated to be USD 4,887 (all calculation results including exercise are kept in one place). Another calculation method is to divide the discount of $3,546 by 4 to get the amortization discount of $887, and then add the interest of $4,000 to $887 to get the interest expense of each bond. Features:
(1) The bond premium is equally divided and amortized from the interest income of each period.
② After amortization, the interest income actually obtained in each period remains unchanged.
for instance
On June 5438+1 October1day, 2002, Company A purchased the corporate bonds issued by Company B on the same day for a term of five years, with an annual interest rate of 10% and a face value of 10000 yuan, and paid a total of 9279 yuan. At that time, the market interest rate was 12%, and the interest at the end of each year was 10.
When a company buys bonds, it is recorded according to the actual payment amount, and the accounting entries are as follows:
Borrowing: Long-term debt investment-bond investment (face value) 10000 loan: Long-term debt investment-bond investment (premium) 72 1 bank deposit 9279 The interest actually received by Company A in each period should include the discounted amortization amount in addition to the interest calculated according to coupon rate 10%, and the bond discount is 72650. The allocation for each period is 144 yuan (72 1÷5), and the allocation for the last period is 145 yuan, which is an integer.
Company A shall prepare the following accounting entries when collecting interest at the end of each year:
Debit: long-term debt investment-bond investment (accrued interest) 1000 long-term debt investment-bond investment (discount) 144 loan: investment income 1 144. In this way, the book value of the bonds purchased at a discount will increase by 144 yuan until the maturity of the bonds, a.