Amortized cost is the original cost of the debt security + any discount, or - any premium, that has been amortized to date.
Why + any discount or -any premium. Can someone explain it to me with example? Many thanks in advace.
Suppose that you bought a $1,000 par, 10-year bond for $900, a discount of $100. For simplicity, you amortize the discount straight-line.
After 4 years you’ve amortized $40, so the amortized cost is $900 + $40 = $940.