If bonds are sold for a discount, the carrying amount of the bonds is equal to the face value less the unamortized discount.

Question

Quizplus · Accepted Answer

When bonds are sold for a discount, the carrying amount (or book value) of the bonds is equal to the face value less the unamortized discount. This is because the discount represents a reduction in the amount of cash that the issuer receives from the sale of the bonds, and must be gradually amortized (or allocated) to interest expense over the life of the bonds. As a result, the carrying amount of the bonds increases over time, until it eventually matches the face value at maturity.

If Bonds Are Sold for a Discount, the Carrying Amount