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If bonds are sold between interest payment dates, it is also necessary to calculate the number of months remaining in the life of the bonds at the date the bonds are sold to record the amortization of premiums or discounts. Recall our original example. $100,000 of 12% bonds was sold on January 1, 2015; in one scenario, a bond premium of $10,485 resulted; in the other scenario, a bond discount of $9,246 resulted. Now assume the bonds were issued on April 1 instead of January 1. The amortization at June 30 would be calculated as follows:
| Amortization of premium: | Amortization of discount: | ||
| Premium is | $10,485(a) | Discount is | $9,246(a) |
| Months left are | 33(b) | Months left are | 33(b) |
| Months amortized to date | 3(c) | Months amortized to date | 3(c) |
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Calculation of amortization April 1 to June 30: (a/b) x c ($10,485/33) x 3 mos. = $953 (rounded) |
Calculation of amortization April 1 to June 30: (a/b) x c ($9,246/33) x 3 = $840 (rounded) |
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Every six months thereafter: ($10,485/33) x 6 mos. = $1,906 |
Every six months thereafter: ($9,246/33) x 6mos. = $1,681 |
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