1. What is Bond Carrying Value?

The bond carrying value represents the net amount at which a bond is carried on the balance sheet. It is calculated as the face value plus any unamortized premium minus any unamortized discount, reflecting the bond's current book value.

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 portion of bond premium not yet amortized
• Unamortized Discount — The remaining portion of bond discount not yet amortized

Explanation: This calculation adjusts the bond's book value to reflect the remaining premium or discount that hasn't been amortized over the bond's life.

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

Q4: Can carrying value be negative?
A: No, carrying value cannot be negative as it represents the net book value of the bond investment.

Q5: How often should carrying value be calculated?
A: Carrying value should be calculated at each reporting period to accurately reflect the bond's current book value.