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Jul 13, 2020 at 07:55 AM

Splitting of Investment in Bonds entries for Face value and premium/Discount value


Dear Friends,

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.