when adjust carry cost, when do we need to deduct dividend? for held-to-maturity, when do we need to consider amortization of discount and premium? Thanks.
- always, deduct the proportional share of dividend from the holding value 2. only if the bond is bought at a premium/discount. The amortized premium/discount is the difference between the coupon payment and the interest expense (price x yield)
do you mean when we do B/S adjustment, then we need to deduct divident from the market value? or from the net income? for bond held to maturity, is the adjustment for the carry value on B/S? Thanks. gjertsen Wrote: ------------------------------------------------------- > 1. always, deduct the proportional share of > dividend from the holding value > 2. only if the bond is bought at a > premium/discount. The amortized premium/discount > is the difference between the coupon payment and > the interest expense (price x yield)
the carrying value under the equity method is almost never market value (if it was, it would be purely a coincidence). you add your share of NI to your investment account, and subtract your share of dividends each period. you hold htm securities at amortized cost, so you amortize the premium/discount over the life of the security.