What does ACI mean in UNCLASSIFIED
ACI stands for Accrued Coupon Income. It represents the interest earned on a bond that has not yet been paid. ACI is recognized as an asset on the balance sheet of the investor who holds the bond.
ACI meaning in Unclassified in Miscellaneous
ACI mostly used in an acronym Unclassified in Category Miscellaneous that means Accrued Coupon Income
Shorthand: ACI,
Full Form: Accrued Coupon Income
For more information of "Accrued Coupon Income", see the section below.
Meaning of ACI in MISCELLANEOUS
In the context of MISCELLANEOUS (Miscellaneous Income, Expenses, and Other), ACI falls under income. It is recognized on a straight-line basis over the period between the purchase or issuance of the bond and the next coupon payment date.
How ACI is Calculated
The formula for calculating ACI is as follows:
ACI = Coupon Rate x Face Value x (Days Held / Days in Coupon Period)Where:
- Coupon Rate: The annual interest rate paid on the bond
- Face Value: The principal amount of the bond
- Days Held: The number of days the investor has held the bond since the last coupon payment date
- Days in Coupon Period: The number of days in the coupon payment period
Essential Questions and Answers on Accrued Coupon Income in "MISCELLANEOUS»UNFILED"
What is Accrued Coupon Income (ACI)?
Accrued Coupon Income (ACI) is the interest earned on a bond from the last coupon payment date to the settlement date. It represents the portion of interest that the buyer of the bond has earned but has not yet received.
How is ACI calculated?
ACI is calculated by multiplying the annual coupon rate by the days since the last coupon payment date, divided by the number of days in the coupon period. The formula is:
ACI = (Coupon Rate / Days in Coupon Period) x Days Since Last Coupon Payment
For example, if a bond has a coupon rate of 5% and the settlement date is 15 days after the last coupon payment, the ACI would be:
ACI = (0.05 / 365) x 15 = $0.2055
Why is ACI important?
ACI is important because it ensures that the buyer of the bond receives the full amount of interest that they have earned. It also affects the bond's price, as the buyer will typically pay more for a bond with a higher ACI.
How is ACI accounted for?
ACI is accounted for as an asset on the balance sheet of the buyer of the bond. It is then recognized as interest income over the life of the bond.
What are some factors that can affect ACI?
The amount of ACI earned can be affected by several factors, including:
- The coupon rate of the bond
- The number of days since the last coupon payment date
- The settlement date of the bond
Final Words: ACI is an important concept in bond accounting as it allows investors to recognize the interest income they have earned on a bond even if it has not yet been paid. It is an asset on the balance sheet and is recognized over the period between coupon payment dates. Understanding ACI is essential for accurate financial reporting and analysis.
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