What Is a Premium on Bonds Payable
Premium on Bonds Payable Is the Excess Amount by Which Bonds Are Issued over Their Face Value. This Is Classified as a Liability on the Books of the Issuer...
Premium on bonds payable is the excess amount by which bonds are issued over their face value. This is classified as a liability on the books of the issuer, and is amortized to interest expense over the remaining life of the bonds.
The total bond premium is equal to the market value of the bond less the face value. For instance, with a 10-year bond paying 6% interest that has a $1,000 face value and currently costs $1,080 in the market, the bond premium is the $80 difference between the two figures.
Definition of Amortization of Premium on Bonds Payable The amount of the premium is recorded in a separate bond-related liability account. Over the life of the bonds the premium amount will be systematically moved to the income statement as a reduction of Bond Interest Expense.
Alexander Ross has covered the video game industry for a decade, writing deep dives on game design, esports tournaments, VR developments, and gaming culture.
