We have a requirement in Fixed Interest Bonds - 04I where the accounting entries has to be split for the face value investment and premium amount investment when the bonds are purchased.
I will give one example:-
Nominal value of bond - 1000, Market value - 1010 (premium of 1) , Price- 110
Ideally, The entry on investment is as follows:-
Investment Account Dr. 1010
Bank Account Cr. 1010 (I am not showing here the accrued interest entry)
But the requirement is that, they want the entries to be split for the nominal value and for premium/Discount value
Investment Account Dr. 1000
Premium on investment Ac Dr. 10
Bank Account Cr 1010
Same things goes when the bonds are purchased at DISCOUNT.