Misconception · MIS:bond-premium-is-revenue-at-issuance

Mistaken idea “Bond premium is revenue at issuance”

Mistaken reasoning: This mistake treats proceeds above face as earned income instead of part of the liability's measured basis.

Updated Aug 21, 2026 Review due Nov 8, 2026

Why this is mistaken

Premium is part of debt carrying amount and reduces effective interest relative to coupon cash over the term.

Where to watch

When this mistake may appear

  • Issue price exceeds face amount.
Check your work

Your work may contain this mistake if:

  • Credit premium revenue on the issue date.