Especially for long-term debt, it is important to determine if the stated interest rate for the debt exceeds or discounts the prevailing market rate. If the rate is the same, it may not be necessary to use the net present value method to calculate the total amount of principal and interest over the life the long-term debt. Keep in mind the value of this debt today is worth more than its value at least a year from now, especially when considering inflation, constant dollar evaluations, consumer price indices, etc.

So you will always carry the amount of principal and interest as current, then amortize the amount of principal with interest payment. Combined this will reduce the carrying value of the debt as it appears upon the financial records.

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Owner Zindah, Inc.
A.A Accounting
B.S Accounting