Amortization of Bond Premium
If the below is for OID, what is it for premium? Let's say $10 premium. Also, do amortization expenses create DTLs? Why/why not? Curious given write-up of intangibles leads to a DTL
- 3 statement impact of OID
- IS: An annual OID amortization expense is recognized on the income statement for each period in the life of the borrowing (and usually) consolidated within the interest expense line item; OID reduces pre-tax income and net income
- CFS: Added back given non-cash item in the CFO increasing the ending cash balance
- BS: On the asset sides, cash increases and debt value increases (face value remains constant but carrying value changes)
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