[hannah]

I am just wondering if I am understanding this correctly. When it comes to basic amortizing bonds at a premium and discount is this entry really juts for book purposes? Since the check amount is always the stated X FV regardless? I am having a hard time fully wrapping my head around that concept.

Input would be appreciated!

Thank you

[GeauxAwayCPA]

Hi @Hannah. Yes, the amortization amount is simply a book expense and always uses the Market rate of interest multiplied by the carrying amount. The actual amount of cash money interest that gets paid out is based on the stated rate that is on the bond/coupons and that will always always always be multiplied by the face amount of the bond and always be the same amount no matter if it's the first payment or the last payment. Hope that helps!

[hannah]

Thank you! That was helpful! IF you have any other FAR tips I'd love to hear them : )

[GeauxAwayCPA]

Glad it helped! Oh geez. Well I failed my first attempt with a 72, so I am no expert. But if there was anything I wish someone would have told me before my 1st attempt at the exam, it's the fact that Government and NFP was so important. That's my own fault for not doing my own due diligence on the topic weightings in advance, but I had passed my first three exams on the first try using the same approach. So going into studying for FAR my thought was “if it ain't broke, don't fix it” right? lol, well I paid for that thought the last 2 months of my life studying for a retake. I am confident I would have passed the first go around if I would have known how important Government, NFP, and IFRS are. When is your exam?

[hannah]

Well good luck. Id say a 72 rocks and you will pass next time. I think I have a good idea of NFP and governmental, I usually score in the 70s on those questions. But maybe I should hit them harder. Other than that I am kinda screwed. Trying to learn bonds and then hit another area or two hard before my attempted at the end of October. I think I may end up pushing it out farther…

[Author]

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