If a debt security is purchased at a discount,the discount must be amortized when the interest revenue is earned.

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When a debt security is bought at a discount, it means that the purchase price is less than the face value. The difference between the purchase price and the face value is called the discount. As interest is earned on the security, a portion of that discount must be assigned to each interest payment, and that assigned portion is then recognized as interest income. This process of assigning a portion of the discount to each interest payment is known as amortizing the discount. Therefore, if a debt security is purchased at a discount, the discount must be amortized when the interest revenue is earned.

If a Debt Security Is Purchased at a Discount,the Discount