When bonds are issued at a premium,the bond issuer receives more cash on the issue date than it repays at maturity.The difference,a premium,is a reduction in the cost of borrowing,which has to be:

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The premium is amortized over the life of the bond.The premium represents the additional cash over the face value that was received at the time the bond was issued.It represents a reduced cost of borrowing,so it is amortized each period,resulting in interest expense that is less than the interest each period.

When Bonds Are Issued at a Premium,the Bond Issuer Receives