If the amount received for the bonds (excludes any accrued interest received and any bond issue costs) is more than the face amount of the bonds, there will be a credit to Premium on Bonds Payable. If the amount received for the bonds is less than the bonds' face amount, there will be a debit to Discount on Bonds Payable. The Premium or Discount accounts are reported next to the account Bonds Payable. The amount of the Premium or Discount is then amortized to Bond Interest Expense over the life of the bonds.
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