Bond proceeds

Definition

Bond proceeds are the funds received by an issuer from the sale of bonds. These funds are typically used for capital projects, refinancing debt, or other specified purposes.

5 Must Know Facts For Your Next Test

1. Bond proceeds are recorded as a liability on the issuer's balance sheet.
2. The total amount of bond proceeds is calculated by multiplying the number of bonds issued by their face value and adjusting for any premium or discount.
3. Issuers may incur issuance costs, which reduce the net bond proceeds received.
4. Bond proceeds can be restricted to specific uses as outlined in the bond covenants.
5. Interest income generated from invested bond proceeds must be reported separately.

Review Questions

Related terms

Bond Covenant: A legally binding term of agreement between a bond issuer and a bondholder.

Face Value:

The nominal value of a bond that is repaid at maturity.

Issuance Costs: Expenses associated with issuing bonds, such as underwriting fees and legal expenses.