Explain the amortization of a bond discount.Identify and describe the amortization methods available.

A bond discount occurs when bonds are sold for less than their par value.The discount represents additional interest over the life of the bond (the full par value must be paid to bondholders at maturity).The amount of the bond discount is amortized over the life of the bond.One method of amortizing the bond discount is the straight-line method.The amount of discount amortized each period is the original discount divided by the number of interest periods.Bond interest expense each period is the cash interest payment plus the discount amortized.Another method is the effective interest method.In this case the bond interest expense is calculated by multiplying the bonds' beginning-of-the-period carrying value by the market interest rate for the bond at issuance.