Zero coupon bond

[keanhu]

As i know that Zero coupon bond does not have any cash interest payment, but after i done a couple of exercise i aware that we need to capture the interest expense in income statement right? why?

 

[suzmis]

Yes, this is true as the interest expense will reduce the discount amount so that at maturity the net amount payable for the bond equals the face value.

 

[keanhu]

Thanks alot....