ABSTRACT
The securities heretofore considered have all carried a stipulated rate of interest or annuity. There is another class in which no periodical interest attaches, but the obligation is simply to pay a single definite sum on a certain date. The present value of that sum at the current or contractual rate of income is, of course, obtained by discounting according to the principles. The rate of interest is always greater than the rate of discount. It is usual to name a rate of discount rather than a rate of interest in stipulating for the acquisition of notes. Compute interest from the balancing date to the maturity of each note on the par at the rate of discount; subtract the total from the total of Discounts account; transfer only the remainder to Interest or directly to Profit and Loss. The investment value of the notes on hand will be the difference between the par and the unearned discount.
