When is the amortization period for a bond premium or discount defined?

The amortization period for a bond premium or discount is defined from the date the bond is issued. This is because the treatment of bond premiums and discounts is based on the issuance price relative to the par (face) value of the bond at the time it is issued.

When a bond is issued, it can be sold at a premium (above par value) or at a discount (below par value), and this difference reflects the effective yield expected by the investor compared to the bond's nominal interest rate. The amortization of that premium or discount is recognized over the life of the bond, which means the amortization period aligns with the time frame from the original issuance to the bond's maturity.

This timing is crucial because it directly impacts the interest expense recognized over the life of the bond. The premium reduces the interest expense recognized in the income statement, while a discount increases the interest expense over time, both being systematically amortized to reflect the changing carrying amount of the bond.

Thus, since the definition of the amortization period is tied to the bond's issuance and contractual terms, it uniquely starts from the date the bond is issued.