The amortization of bond discount is the allocation of the discount over the remaining life of the bonds to account for the increase in interest expenses each period. For each period, the interest expense will be higher than the interest paid, with the excess being the amortized amount of the discount (bond discount) relating to a respective period.

This process results in a continuous, gradual decrease in the unamortized discount over time, while the carrying value of the bonds (as reflected in the difference between face value and unamortized discount) gradually increases over time and up to maturity (where it becomes equal to the face value.) At maturity, the unamortized bond discount will stand at zero.

Amortizing a bond discount is typically carried out using one of two methods: 1) straight-line method (SLM) and 2) effective interest method.