I’ve asked this before, and still don’t get it. The major examples in both CFAI & Schweser have been replaced with errata (the same conceptual mistakes), but no real explanation is given. I understand that in accounting for bonds which are investments in financial assets my interest payment is the effective interest (i.e. the market rate when I bought them times the carrying value). Held to Maturity I must amortize up or down the carrying value with the excess/shortfall of the actual coupon (taking out the notional interest). But where do these go? Does the coupon all go the I/S, with a portion of it labelled “interest”. If not - if only the “interest” goes on the I/S then where do I get the excess funds from to grow my, say, discounted carrying value towards par? It can’t just jump up can it? And if the effective interest, rather than the coupon, is used for Held for Trading bonds, where does the excess go? It just doesn’t seem to add up - suppose I buy a bond for $96, receive a $2 coupon, then sell it for $99 - I’ve gone in and out and made $2 + $3, i.e. $5. BUT if I account only $1 of the coupon as interest, then I add up my interest and capital gain ($4), and I’ve not accounted for the extra dollar. Where does it go?! So 2 questions, essentially: 1) What are the mechanics of Held to Maturity amortization? 2) How does effective interest vs actual coupon work with traded bonds? Thanks!