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 bond's face value plus any unamortized premium or 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
• Unamortized Premium — The remaining premium that hasn't been amortized
• Unamortized Discount — The remaining discount that hasn't been amortized

Explanation: This calculation shows the current book value of the bond, reflecting both the original face value and the accumulated amortization of premium or discount.

3. Importance of Carrying Value Calculation

Details: Accurate carrying value calculation is crucial for financial reporting, bond valuation, and understanding the true cost of debt for a company.

4. Using the Calculator

Tips: Enter the bond's face value, unamortized premium, and unamortized discount in currency units. 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 principal amount repaid at maturity, while carrying value is the current book value that reflects 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 over the life of the bond using the effective interest method.

Q4: Why does carrying value change over time?
A: Carrying value changes as premium or discount is amortized, bringing the value closer to face value as maturity approaches.

Q5: Is carrying value the same as market value?
A: No, carrying value is based on amortized cost while market value fluctuates with current interest rates and market conditions.