Intercorporate Investment CFAI Reading Example 1 Errata

Hi, I checked the errata page for cfai and I am getting confused. The original solution in the book for example 1 looks correct. However, the errata is confusing me. It asks to change the interest income for available for sale and held for trading rows. Essentially, it is asking to change the interest income for these methods to include amortization. Can someone confirm that the interest income for available for sale and trading securities only includes the coupon and not amortization? Thanks.

Actually, I came across a quesiton on this in the vol2 Schweser practice exams…but it was about HTM, were they adjusted for the amount of amortization in the balance sheet carrying value of the bonds. I hadn’t been aware of that before…although it makes sense of course since HTM bonds are carried at “amortized cost”! As far as AFS and HFT assets are concerned, I remember seeing a question somewhere once which asked whether the interest income on a premium or discount bond (HFT) would be higher and the answer was that it would be higher for the discount bond, so that seems to suggest that you would include the amortization of the discount in the interest income. Most questions just happen to use par bonds…

Thanks for the reply. I double checked the cfai text and actually it did not mention that the interest should not include amortization for available for sale and held for trading securities. I got that from Schweser. So, I have to say that Schweser is probably wrong in this case. In other words, the interest for all three types of financial assets (HTM, AVS and HFT) should include the amortization portion.