Amortized Bond

AAA

DEFINITION of 'Amortized Bond'

A financial certificate that has been reduced in value for records on accounting statements. An amortized bond is one that is treated as an asset, with the discount amount being amortized to interest expense over the life of the bond. If a bond is issued at a discount - that is, offered for sale below its par (face value) - the discount must be treated either as an expense or it can be amortized as an asset.

INVESTOPEDIA EXPLAINS 'Amortized Bond'

Amortization is an accounting method that gradually and systematically reduces the cost value of a limited life, intangible asset. Treating a bond as an amortized asset is an accounting method in the handling of bonds. Amortizing allows bond issuers to treat the bond discount as an asset over the life of the bond (until the bond's maturity).

RELATED TERMS
  1. Amortization

    1. The paying off of debt in regular installments over a period ...
  2. Average Life

    The length of time the principal of a debt issue is expected ...
  3. Maturity

    The period of time for which a financial instrument remains outstanding. ...
  4. Bond

    A debt investment in which an investor loans money to an entity ...
  5. Municipal Bond

    A debt security issued by a state, municipality or county to ...
  6. Par

    1. The face value of a bond. Generally $1,000 for corporate issues, ...
Related Articles
  1. Six Biggest Bond Risks
    Bonds & Fixed Income

    Six Biggest Bond Risks

  2. The Advantages Of Bonds
    Investing

    The Advantages Of Bonds

  3. The Bond Market: A Look Back
    Mutual Funds & ETFs

    The Bond Market: A Look Back

  4. Boost Bond Returns With Laddering
    Bonds & Fixed Income

    Boost Bond Returns With Laddering

Hot Definitions
  1. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  4. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  5. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  6. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
Trading Center