Zero Coupon Bonds

jtbermuda's Avatar

jtbermuda

27 Jan, 2019 01:19 PM

Any suggestion on how to treat zero coupon bonds, such as T-Bills? So far I just treated it as a normal buy and got the new price every month end. The security has now matured so I received more than I paid for it, which is really interest not a gain on sale/maturity. If I treat it as a sale at $100 the cash balance will be correct but it will show as a gain rather than interest. Any suggestions?

  1. 1 Posted by dwg on 27 Jan, 2019 08:35 PM

    dwg's Avatar

    I'm a fellow user.

    I suppose the easiest way is to enter it as two transactions. One a Div or MiscInc transaction categorized as interest for that component and a sale at the original price. You probably received a single payment covering both so you process the total of the transaction to the account that the money was placed into.

    I regularly receive Dividends that are comprised of two components and process it this way in the investment account so I can classify them correctly, then just have one number being transferred to my Cheque account as the bank just gets the total amount without knowing a split even exists.

  2. 2 Posted by -Kevin N. on 27 Jan, 2019 09:33 PM

    -Kevin N.'s Avatar

    Hi jtbermuda,

    I see this as similar to CD's that I recently redeemed.

    To echo dwg's reply, two transactions, a Sell transaction for the face value and an MiscInc transaction to cover the interest.

    -Kevin N. (not a member of MD support)

  3. System closed this discussion on 28 Apr, 2019 09:40 PM.

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