USA Calculating Accrued Interest on Bonds Payable

SDR

Joined
Oct 19, 2017
Messages
1
Reaction score
0
Country
United States
I know the basics of the calculation. My questions is really about the timing. A client paid their scheduled bond payment on 5/16, two weeks prior to the scheduled due date of 6/1. I need to book an accrual for interest as of 6/30 based on the amount of interest per the amortization schedule. My question is does the accrual period begin from the last actual date of payment(5/16) or the scheduled accrual date of 6/1? Note: Calculation is based on 30/360. Thanks for any help! Also, please provide any FASB/GASB guidance if possible.
 

kirby

VIP Member
Joined
May 12, 2011
Messages
2,461
Reaction score
334
Country
United States
The answer lies within the bond agreement. You only have a calculation problem if the agreement calls for a "daily simple interest calculation" , which is very unusual for a bond. Otherwise most bonds read as " pay $x on due date, else there is a late payment charge" . The beauty of that is it maintains the original amort schedule without having to worry or calculate a new amort if a payment is a few days late.
And in your case, if NOT daily simple interest then if you pay early - well then you paid early and you give effect to that on the balance sheet and we still follow the same amort & accrual schedule.
So you need to read the bond agreement.
This is a "business practice/common sense" item. No FASB I know will cover this.
 
Last edited:

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Members online

No members online now.

Forum statistics

Threads
11,790
Messages
27,864
Members
21,814
Latest member
RickyglicE

Latest Threads

Top