How to Amortize a Bond Discount

This video explains how to account for bonds issued at a discount using the effective interest rate method for bond discount amortization.
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[@zaidthunder1]

I watched multiple videos to get an understanding of bonds issued at premium and discount - I just could not understand the concept clearly enough, until I watched your two videos of amortizing bonds at discount and premium. You explain very well, hats off to you !

[@Edspira]

Thank you!

[@sethhastings5407]

As a student in a Masters of Accounting program, your videos have literally been a lifesaver. I know comments can go unnoticed but your videos are the perfect examples and perfect way of explanation. Thank you for taking time to put these videos out.

[@mitchellmitchell6938]

Who else is taking financial accounting course??

[@ImANightCreature]

Me and my finals is tomorrow HAHA

[@vesta2221]

Me

[@NATNAEL.]

@@ImANightCreature how was the ur exam

[@kantaito7748]

Thank you so much for posting this and dumbing down all the information for me.

[@checkHook93]

Thank you. Im doing a problem with intercompany bonds (parent-sub) and needed a refresher course on bond discounts. You just saved me lots of time!

[@nickw22689]

Sir, you make, by far, the best accounting video lectures I've come across. Thank you, thank you, thank you.

[@carolinavargashinojosa6084]

I have never understood how bonds worked. Your videos helped me finally learn this, thank you so much!!!

[@Edspira]

Happy to help!

[@luyandzadlamini3073]

This video explained the effective interest method 10 times more clearly than this insanely expensive text book I have ever could. Thank you!

[@Edspira]

You're very welcome!

[@gothampartners888]

I'm currently studying for the CFA L1 exam and nothing helped me so much understanding the reason for different rates (market interest rate vs coupon rate) and why you amortize a bond. Been looking and reading for hours but your video talks all about it and it's very easy to understand. Thank you so much for saving me precious hours!

[@SanjaySharma-xz8wj]

Thank you so much, Read chapter 17 intermediate accounting multiple times, looked at the PP but finally everything is so well explained in this 18-minute video.

[@harrietzhang2605]

A few years back I was an accounting student at uni and learned about amortised cost for bond. Now I'm preparing for my CPA exam and just want to watch a video to help me quickly pick up all the concepts and logic. Watched 3 other similar videos but none was as clear and thorough as yours. Much appreciated!

[@Edspira]

Thank you, I hope you ace the CPA exam!

[@benrobertson1913]

Edspira, I just wanted to say thank you for everything you've done with your channel. It has been tremendously helpful for me and I'm sure so many others.

[@Edspira]

Thank you for the encouragement, I really appreciate it. I'm glad you find the videos helpful!

[@FooserX]

Outstanding lecture. Like the other commenter said...this video is stripped down into very easy to understand ideas. I was so confused with my college instructor, but this clear things up very well. Going to check out your other videos!

[@rachelhalwig6147]

Thank you so much for all the videos you make, it makes understanding all these concepts so much easier! Best videos I've learned from!

[@mariellepetty8878]

man, im at the ned of my semester, but I'm glad I found this in time for studying over winter break and prepare for spring semester.

[@Tiffany8620]

This video was a game changer for me when it came to understanding how to amortize bonds. I've been so frustrated the entire day until this video. Thank you!

[@Edspira]

I'm so glad it finally clicked! You should be proud of yourself for sticking with it!

[@mayerli16]

thank you !!!! This was really helpful. Thank you for being thorough it made it easier to understand and keep up!

[@damianzavala6088]

Very concise and clear, you made it look so easy. I learned a lot the past 19 minutes. Thanks

[@vinn4664]

really glad for this! our modules didn't provide step-by-step procedures that led me here, thankyou for this!

[@BogieRaven]

This help so much in trying to understand the math behind the journal entries. I wish my textbook would go this in depth. Thank you!

[@luzeneidavaldez206]

I really love how you teach, you are the best! your explanation is so clear.

[@pubgmobile-kk1oq]

i was reading the chapter of bonds the teacher gave us and i have not understood anything. but when i wachted your video everything is clear now. thank you so much for this lesson.

[@vkrv3168]

Hi Edspira, This is an excellent knowledge sharing content which helped me to grasp the calculation of bond's carrying value(PV of bond), amortization of discount on issue of bonds in a span of 20 minutes. I spent almost 15 years for getting this clarity. Thanks a ton. God bless your noble service.

[@Edspira]

I'm so happy to hear that you've grasped this concept! Thank you for your support and encouragement 😀

[@agathaventers7430]

Many thanks for the effort that went into these videos! Very very helpful!

[@missmousers]

Thank you for your videos....they have helped me so much during my classes for my accounting degree.

[@ieetyou]

This is a complicated concept for newbies like me. You explained it better than anyone else man!

[@Edspira]

Thank you!

[@gswarriors53]

studying for cpa and needed this visualization and reminder for bonds... great job

[@chrisweber759]

So glad he decide to write out how he got the present values!

[@MyFinancialFocus]

Bond discounts are an interesting concept. This video is super helpful!

[@vahehgeragosian]

This was a great help. Thank you for clear explanation.

[@welp3029]

thanks for these videos you give me hope

[@kimmckersie9661]

Michael thank you so much for these videos! You are a lifesaver!

[@Edspira]

No problem my friend! Best wishes!!

[@alanchen2996]

thank you so much. you really helped me. so much easier to understand than my textbook. you the man!!!!!!!!

[@elizabethadao7279]

This might be one of your best videos! Thank you!

[@Edspira]

Thanks Elizabeth!

[@mitchellmitchell6938]

Is that your picture? You’re fkn hot!

[@Rob-te5ct]

Thank you sir! MUCH better than reading the textbook

[@Chinnookcrazy352]

I Wish my instructor had explained these like you did. First time I have understood what is happening and how to calculate each step. Thanks for a great video.

[@ashalk3985]

Thank you so much for explaining this! :)

[@kylehadley5550]

So easy to understand. Thank you.

[@lingorocks]

Awesome videos. Thanks so much!

[@pl1753]

Thanks for the video! Bonds clearly explained finally !

[@Edspira]

Thanks!

[@dcggil]

Love your videos!!!

[@yulduzjalilova4184]

thaaaaaaaaaaaaank youuu soooooooooooooooo much. you saved me. i couldnt solve this for hours and i found your video ad did it for 20 minutes)))))) thank youuuuu

[@Edspira]

Awesome!!

[@farhanshirzad9658]

Thank you for your video, I am online accounting student, and I learned the bond amortization from your video.

[@Edspira]

That's great to hear! I'm happy you were able to learn it!

[@rob8482]

Nice Job, I appreciated the refresher on present value calculation!

[@Edspira]

Thanks Robert!

[@theamazingjuggleman2395]

Thank you very much, this was a great video

[@sanjarbaloch7053]

You are way of delivering the lecture just awesome sir!!!

[@Edspira]

Thank you so much! I'm glad to hear that you're enjoying the videos!

[@DonChubb]

Thank you so much for making these videos. You are saving my bacon as I study.

[@Edspira]

Happy to help!

[@nealbird732]

Great explanation. Thanks

[@phillipgunter8375]

ABSOLUTELY WOW!!!! YOU ARE AN AMAZING TEACHER!!! THANK YOU SO MUCH

[@Edspira]

You are so welcome!

[@oshanirosh]

thank you very much. this concept are able to understand from this video

[@shayanghafary6857]

thanks a bunch man, this really helped.

[@Edspira]

No problem. Thanks for watching!

[@WOODZ2111]

Thank you sooo much! your explanation rocks.

[@Edspira]

Glad it was helpful!

[@alassanekane4269]

You are a great teacher or professor

[@alissabell4033]

yea you helped me more that ever thanks so much have a good day

[@guilhermeal2170]

Really helpful !!!

[@SuperGrey95]

Thank you so much, you're a lifesaver!

[@Edspira]

Happy to help! Take care and best wishes :)

[@storiesmadeeasy4629]

i really like your videos..... awesome... thanks alot

[@shaunaweisser8575]

thank you! do i need to make any more journal entries after the last interest expense 1/1/20? or is that the last and final one

[@andrewkoren4805]

hi there, love your videos, very helpful. Just wondering what would the journal entry look like for the retirement of the bond and what would be debited and credited?

[@yuniorgalardy2781]

Thank you. Please keep posting more videos.

[@Edspira]

Right now I'm teaching 5 classes, so I don't have the time to put up more content. But, stayed tuned... I'll be releasing many more videos this summer! Thanks for watching.

[@dstephanie5492]

thank you sm! you're my accounting god!

[@MichaelKelly4numbers]

Thanks so helpful

[@siriornpoontreeratn7971]

honestly this helped me better than becker. I've always had issues with bonds or any debt instruments

[@chandrahunt4165]

this was so helpful omg thank you

[@Edspira]

Happy to help!

[@asa-enebenson7499]

PERFECT, I LIKE YOUR CLASS

[@sukeadventures5928]

Thank you!!! So what figures are then represented on SoFP and SOP

[@ariah5093]

Thank you, again!

[@bevansmith3210]

Thank you for your videos. So does that mean that in addition to the R30k we need to also pay the discount amortization every time as well?

[@ndoo3575]

You are the best 💛

[@shekynamangum6165]

Life saver thanks a bunch

[@user-xm5rw8lw7x]

Hello, your video is very helpful. I am midway through and I have a question about the 6:00 minute mark. To get the new interest rate, you have to always divide by 2 if the question says it semiannual? Thank you

[@varvorines]

can someone explain that funky formula @7:59 the PV int Pmnt and how I can type that into excel manually without using the formula???

[@gallogojhercylleannt.4659]

Thankyouu for this video i did my task very well. 🥰🥰🥰

[@FatMexxican]

ur the goat man saved me from fckn my accounting exam hopefully

[@user-ui3wv6qt1q]

Thank you!

[@kassandraharrison1181]

THANK YOU SO MUCH PROFESSOR ur a lifesaver! could you do a video on semi annual premium amortization schedules? how does it change?

[@alisyed156]

thank you so much I wasted hours trying to figure it out from the book

[@filemanager8182]

Thank You very much 😍😍😍

[@evyredman6059]

thank you so much

[@loril6773]

Thank you sooooo much for this! :-)

[@Rijo27]

Question: from the power point that my teacher is using for class there is another column within the table called Discount Account Balance. I noticed you don't have that in your table, so is it something that should be ignored?

[@maryzu664]

excellent! thank you!

[@Edspira]

Glad you enjoyed it!

[@leleiskindofcool]

In my class we used PV Factor and PVAnn to get carrying value (which I did not understand, which is why I'm here). I imagine on the exam I'll need to calculate PV Factor and PVAnn. How are these related to PV Principal and PV Interest? Btw, your method makes a lot more sense to me!

[@pacificreef6391]

Thank you Sir...

[@RangerXXT]

Doctor Professor McLaughlin sir, do you have a video on recalling bonds prior to their maturity dates? I can't seem to find one.

[@BrandonKellyYT]

thank you!!

[@Edspira]

You're welcome!

[@mitchellmitchell6938]

16:46 best point made!!!!

[@zahidgul9777]

It is very use full. Much better then Mac Graa Hill Education system.

[@mypage9331]

Excellent! do you have a video on convertible bond accounting?

[@RandomGlobe]

Thanks!

[@Edspira]

No problem! Best wishes

[@stevenbetter4255]

I have a question involving lower credit loans being treated as OID bonds... An interest rate is no given (market or coupon rate) and the model is set up accretion not amortization. The purpose of this exercise is to calculate the minimum amount of required capital to achieve a desired credit designation. Any guidance in this matter will be greatly appreciated.

[@cherylkeck9689]

Thanks so much for posting this! I just couldn't grasp this in my online course I've been frustrated for days and this makes sense now. My question is - there is a constant market rate used of 4% in this example to determine the discount amortized, but in reality wouldn't that market rate fluctuate too as time goes on?

[@TheBlaze450]

It would! The reason we don't care about that is because it is fluctuating after the sale of the bond. The difference between the market rate and the stated rate is only relevant when the purchaser of the bond is considering their options. The adjustment (discount) is only made to bring the effective rate of the bond (the purchaser's return on investment) up to par with the rest of the market. Once the sale has been made, it's like any other agreement and is locked in place no matter what happens to the market.

[@footballgoats1355]

thanks good job

[@Edspira]

Welcome 👍

[@MichaelOnRockyTop]

I did watch your time value of money tutorial but Im curious as to why 1 is always used in the formula

[@jaironcm91]

hello, great video!! Question: How will you get the amortization of discount at the end of the first year, using the straight-line method??

[@kwakupoku3719]

You divide the discount amount by 8 period

[@aprilkong9788]

fabulous

[@prabhjitsangha4430]

You sir are a legend

[@Edspira]

Thank you!

[@larco9028]

Hi- what is the reasoning behind using market rate for PV of principal?

[@markj8577]

Thanks for the video! One question that haunted me is: why do we add the amount of discount amortized to calculated the carrying value? Thanks in advance

[@markj8577]

Why the value of the bond is more valuable after it has already payout interest?

[@fnepne5283]

How did you calculate the answer at 7:58 I tried calculating it over and over making changes and corrections to how I rendered it into my calculator and I even used google lens and STILL couldn't figure out how you got that answer.