hey adq 123, I think u get confused because you miss 1 detail, bond discount (or premium) is included in Non cash charge category => So you are considered as Bond Issuer.
below is why we should add back amortization of bond discount.
What is discount bond and what does it mean? It means that your bond (you are issuer) have coupon is less than require yield.
what amount should u reflect on your finacial statement? It is require market yield ( to be exact, Effective market rate) not coupon bond. let’s say coupon is 50, required yield is 100. So you recognized 100 in your IS. Ignore tax for simplicity, it will lower your CFO by 100 (or Net income) Of course, it is not cash expense, so you need add up the different between 100-50=50=> FCFF should be add back 50,too.
the word “Amortization”, it means add up Liab in the case of Discount bond, and subtract from Liab in the case of Premium bond.
And this is how the BS be balanced: Expense increase 100 ( Equity decrease 100), Actual cash out flow 50 ( Asset decrease 50), longterm liab increase 50 (liab increase 50)