1. What Is Bond Carrying Value?

The bond carrying value represents the net amount at which a bond is reported on the balance sheet. It is calculated as the face value plus any unamortized premium minus any unamortized discount.

2. How Does The Calculator Work?

The calculator uses the bond carrying value formula:

Where:

• Face Value — The principal amount of the bond that will be repaid at maturity
• Unamortized Premium — The remaining portion of bond premium that hasn't been amortized
• Unamortized Discount — The remaining portion of bond discount that hasn't been amortized

Explanation: This calculation adjusts the bond's book value to reflect the gradual amortization of premium or discount over the bond's life.

3. Importance Of Bond Carrying Value

Details: The carrying value is essential for accurate financial reporting, interest expense calculation, and understanding the true cost of borrowing through bond issuance.

4. Using The Calculator

Tips: Enter the bond's face value in currency units. Provide unamortized premium and discount amounts if applicable. All values must be non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between face value and carrying value?
A: Face value is the amount repaid at maturity, while carrying value is the current book value after adjusting for amortized premium or discount.

Q2: When does a bond have a premium or discount?
A: A bond sells at a premium when its coupon rate exceeds market rates, and at a discount when its coupon rate is below market rates.

Q3: How is premium or discount amortized?
A: Premium or discount is typically amortized using the effective interest method over the bond's life to maturity.

Q4: Does carrying value change over time?
A: Yes, as premium or discount is amortized, the carrying value approaches the face value as the bond nears maturity.

Q5: How is carrying value used in financial statements?
A: Carrying value is reported on the balance sheet and used to calculate interest expense on the income statement.