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What is the impact of amortization of bond premium each period?

Sagot :

What is the impact of amortization of bond premium each period?

  • If the interest paid on the bond is taxable, the premium paid on the bond can be amortized, or in other words, a part of the premium can be utilized towards reducing the amount of taxable income. Also, it leads to the reduction of the cost basis of the taxable bond for premium amortized in each period.

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