What is an Unamortized Bond Premium?

An unamortized bond premium is the difference between the price at which a bond was sold and its face value. It is classified as a liability of the bond issuer, since it represents interest that has not yet been paid to bondholders.

The unamortized bond premium account contains the remaining amount of bond premium that the bond issuer has not yet charged off to interest expense over the life of the bond. The balance in this account will gradually decline over the remaining life of the bond, as the issuer gradually amortizes the premium.