Face amount answers a contractual question: how much principal is promised at maturity and what base determines a fixed coupon. It does not report what the issuer received or the liability's current carrying amount.
A $1,000,000 face bond can begin below or above $1,000,000 and accrete or amortize toward face. Those differences are measurement layers, not changes to the promised principal.
Use face for the promise
ASC 835-30-25-9 separates face amount from present value through discount or premium. Face remains the contractual principal base even when the instrument begins at another carrying amount.
For a $2,000,000 face bond with a 6 percent annual coupon paid twice a year, each coupon is $60,000: $2,000,000 times 3 percent. A market yield of 8 percent affects price and effective interest, but it does not change those promised coupons. ASC 470-10-50-1 also uses contractual maturities for the debt disclosure.
Put the concept to work
Apply this concept
- Use supplied face amount to compute contractual coupon cash and maturity principal while keeping issue price and carrying amount separate.
Learning resources
Choose a lesson, try an application, or inspect the sources behind this concept.
Build on these ideas
- Debt contract cash-flow map — Analyze
To apply this concept: Required. Face amount is one contractual term within the full cash-flow map.