Multiply the current balance of the bond by the effective interest rate to arrive at the interest expense to record for the period.Ĭalculate the difference between the interest payment (step 2) and the interest expense (step 3). Multiply the face value of the bond by its stated interest rate to arrive at the interest payment to be made on the bond in the period. The market rate is the effective rate of interest. The discount rate used is the market rate of interest. The following steps are used to prepare the table using this method:Ĭalculate the current balance of the bond payable by discounting its remaining cash flows. The most accurate method used for this calculation is called the effective rate method. The table is commonly used by the issuers of bonds to assist them in accounting for these instruments over time. A bond amortization schedule is a table that shows the amount of interest expense, interest payment, and discount or premium amortization of a bond in each successive period.
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