Accounting treatment of bonds purchased at discount or premium

(a) When bonds are purchased at a premium, the amount of the premium shall be amortized monthly on a straight line basis over the life of the bond. The monthly amortization shall be charged against income. (b) When bonds are purchased at a discount, the amount of the discount shall be accreted monthly on a straight line basis over the life of the bond. The monthly accretion shall be reflected as income. Accretion income will not be distributed. (c) When bonds purchased at a discount or premium are sold, the difference between the sale price and the purchase price or amortized or accreted purchase price shall be treated as a realized gain or loss as defined and outlined in Sec. 3-31b-10.